Vanguard Tactical

VANGUARD ETFs HAVE SOME OF THE LOWEST EXPENSE RATIOS IN THE INDUSTRY, AND ARE AMONG THE MOST POPULAR FUNDS AMONG INVESTORS.  THIS MODEL USES VANGUARD ETFs EXCLUSIVELY.

Strategy Description

The Vanguard Tactical ETF model starts with a broad cross-section of asset classes: bonds, equities, sectors, real estate, and international equities.

Each month, the ETFs are ranked on a combination of trend, relative momentum, and volatility.  The top three scoring ETFs are then held until the next monthly rebalancing.

During periods of stock market weakness, the model may automatically allocate to cash and short-term bonds in order to protect capital.

Definitions

Sharpe Ratio – the average return earned in excess of the risk-free rate.  A higher Sharpe Ration is better

Risk-Free Rate – represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.

Sortino Ratio – another measure of risk that takes into account the downside deviation of the asset.  A higher Sortino Ratio is better.

What is Drawdown?

Drawdown is the measure from the highest high to the lowest low or peak to trough during a specific time period.  It is an important measurement of risk.  A larger drawdown requires a more significant increase in the security to recover.

Volatility measures the change in the price of an investment.  The higher the volatility, the higher the difference between the high and the low of an investment’s price.

The 12 Month Rolling ROR is the compound rate of return for the last 12 months.  The rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.

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