ETF Core Strategies
Aim: To trend-trade general equity ETFs so as to ride rallies and buck busts in the Australian share market.
First, decide whether you want to pursue a Conservative (average signal change every 6 months) strategy. Note that there can be large variations in the time duration between signal changes. For instance the Conservative Strategy typically has two signal changes a year, but in practice it can range from nil to seven signal changes per annum.
Next, apply the strategy you have chosen. When the Australian share market is attractive we issue a ‘Buy’ signal. You then invest in a balanced portfolio of shares, a mutual fund or more simply in just one listed share (an exchange traded fund or a listed investment company). Another alternative is to switch to an option with shares within your superannuation fund. Talk to your financial adviser about the best approach to gaining exposure to the Australian share market since we do not know your personal circumstances and risk profile and are only authorised to provide general, not personal, advice. Beware of managed or super funds with a few days delays in implementing your instructions. In such cases only the Conservative Strategy should be considered.
When it’s not safe to be in shares, we issue a ‘Sell’ signal so that you can divert your hard earned savings from shares to a cash management account or trust where they are sheltered from any stock market contractions. Again the best form of cash deposit is not for us to say. Online share trading accounts usually offer a linked cash management account.
MarketTiming’s share strategies can also be used for risk-managing a private superannuation account, whether it’s a self-managed fund or part of a pooled industry, retail or corporate accumulation fund. In the latter case there is usually a choice between different investment options such as Ultra-Conservative (100% income assets such as cash deposits and fixed interest securities), Conservative (70% income assets and 30% shares), Balanced (50% income assets and 50% shares), Diversified or Growth (30% income assets and 70% shares) and High Growth (10% income assets and 90% shares).
When the Conservative strategy’s signal is ‘Buy’ an investor could opt for the Balanced, Diversified or High Growth options so as to have a higher stake in shares. When it’s ‘Sell’, the investor could opt for the cash option so as to minimise share exposure.
A more refined approach is to apply MarketTiming’s Conservative strategy signals to only the Australian share component of an industry, retail or comporate super fund. That’s because the Conservative strategy is designed for timing the Australian share market even though most share markets around the world have price trends that are positively correlated.
We must stress that we cannot advise you on how best to use MarketTiming‘s signals for asset allocation since that will depend on your personal financial circumstances and risk profile. Please talk to your financial adviser before using MarketTiming’s signals for varying the asset mix of your private superannuation or other investment portfolios.