The Dispatch

Manager Spotlight

Clearly Defined Quantitative Decision Models

The Kensington Managed Income Strategy strives to minimize subjectivity in the decision-making process to generate steady, above-average positive returns with low volatility, and to provide downside protection for investor portfolios. The strategy offers:

• A 30-year history of consistent returns through varying market and interest rate cycles
• Signal-based model designed to capture up markets while avoiding down markets
• Confidence through quantitative analytics

Founded by Bruce DeLaurentis in 1984 as Kensington Analytics, the firm initially provided trading signals to institutional clients utilizing a proprietary trend-following system. DeLaurentis refined his methodology through the years as more sophisticated computing technology emerged, and Kensington Asset Management launched its first strategy, Kensington Managed Income, in 1992. Their flagship strategy has a long track record of providing compelling risk-adjusted returns in varying economic cycles by tactically allocating between high-yield bond mutual funds and ETFs.

Specializing in data-driven quantitative decision models that apply to the equity and fixed-income markets, Kensington’s model framework is designed to recognize and measure consistent and repeating behavioral patterns in the markets, allowing them to identify and act on prevailing market sentiment. Its proprietary techniques help Kensington to distinguish random “noise” in price movements from a valid change in trend. This risk management discipline is utilized to alert them to exit positions early in the declining phase of a trend to minimize and avoid principal loss and is an important driver of performance alpha.

The model uses daily proprietary quantitative indicators to guide the strategy’s allocation and determine buy/sell decisions. The Kensington Managed Income Strategy rotates between two investment modes:

• Risk-On: When markets are generally trending upward, Managed Income allocates to higher yielding fixed-income securities across the high-yield and multisector bond categories. This allows the strategy to reap the highest level of yield when confidence in the market is high.
• Risk-Off: When the overall trend is one of decline or high volatility, Managed Income shifts into shorter duration instruments, including U.S. Treasuries or cash equivalents. This helps to protect principal and mitigate drawdowns.

This iterative, signal-based approach has historically allowed Kensington to largely avoid broader drawdowns.

Details are available on the EQIS and Freedom Advisors platforms.

If you would like to deploy these strategies using the EQIS platform, go to the respective client contact and from the Action drop-down menu in the upper right corner, select Change Asset Allocation.

This option is only available for clients who have provided you with trading authorization. If you do not have trading authorization, you can either submit a Limited Power of Attorney signed by the client or use the Client Directed Asset Allocation Form found on the Resources Tab and have the client sign it.

Your EQIS Business Consultant is available to help you implement these changes, or contact Advisor Services at support@EQIS.com or 800-949-9936 and press 2.

The information is believed to be reliable but is not guaranteed by EQIS. EQIS and Kensington Asset Management are not affiliated. This is not an offer to buy or sell securities.

In This Issue:

• Q1 review & Outlook   |   How Q1 Shapes the Rest of 2022
• State of the Markets   |   Stocks Sell Off, GDP Contracts
• Manager Spotlight   |   Clearly Defined Quantitative Decision Models
• Best Practices   |   Who’s on Your Bus?

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