Four Points Momentum Indexes
The Four Points Momentum Indexes ("the FMPI") incorporate a quantitative, rules-based approach to investing. The FPMI provides clear signals to make investment decisions based on data - not on emotions, sentiment or punditry.
FPMI's holdings are constructed from an investing universe of equity, fixed income, and other ETFs based on their low or negative annualized correlations.
The Indexes automatically adjusts holdings based on measurements of risk, trend, and momentum within their portfolio.
Our proprietary strategies do not leave capital sitting in equities through long periods of stock market declines. When the index signals a downtrend has been confirmed, invested capital is moved away from equities and into assets demonstrating positive momentum.
GENERATE EQUITY MARKET RETURNS IN BULL MARKETS
PRESERVE CAPITAL DURING BEAR MARKETS
GROW AND PROTECT CAPITAL OVER FULL MARKET CYCLES
Four Points Indexes
The Four Points Momentum Indexes (the "Indexes") are maintained by automated, momentum investing strategies that invest in and rebalance highly liquid ETFs demonstrating positive momentum.
When the Indexes rebalance, they select from a concentrated portfolio of assets performing well based on proprietary trend-following models.
For instance, if all assets meet required momentum criteria, the exposure of an Index could be 20% to the S&P 500 US Large-Cap Index ETF, 20% to the Nasdaq 100 Tech Index ETF, 20% to the Nasdaq Semiconductor Index ETF, and the remaining 40% to low or negatively correlated ETFs.
Other Indexes, which are primarily composed of equity index ETFs, target higher returns and will likely have commensurate higher volatility profiles.
Periodically the Indexes rebalance by exiting all positions and then update holdings based on the portfolio constituents currently meeting a particular Index’s momentum criteria. At times, this may result in the Indexes holding a more concentrated exposure due to a fewer number of assets meeting momentum criteria.
The Indexes have been back calculated over 20+ year time horizons and are designed to automatically adapt to various market conditions as they unfold.
The liquidity and depth of the trading instruments chosen for the portfolios enable the Four Points Momentum Indexes to take on a capacity of greater than $10 billion in AUM each.
About the Four Points Momentum Index
Long Term Wealth Potential
Consistent and Efficient
The Indexes automatically invest based on trend direction, momentum and price movement.
Investments are selected from a diversified basket of ETFs, chosen for their low beta correlation in an attempt to generate positive returns, even when broad market equity indexes are declining.
Our Indexes endeavor to protect open-trade gains in positions via stop-loss orders, to increase returns over time.
Quantitative research equips our Indexes with the ability to capture long term equity market gains while automatically rotating holdings into defensive positions.
The Indexes are designed to protect capital against long term market declines.
These systematic capital preserving trades enhance the potential for long-term wealth creation.
The FPMI Indexes update each evening after the market closes.
The Indexes makes trend trades that may last from weeks to months.
Four Points Momentum Indexes are available for separately managed accounts, Funds, or ETFS.
Follows trends and holds diversified assets displaying positive momentum
The Four Points Momentum Indexes (the "Index", "Indexes" or "FPMI") select from an investing universe of equity, fixed income, and other ETFs based on their low or negative annualized correlations. The Index uses this investing universe to construct its holdings.
Each Index automatically adjusts holdings based on measurements of risk, trend, and momentum within its portfolio.
Invested capital is not left sitting through long periods of stock market declines. The indexes seek to use these times for capital appreciation in assets demonstrating positive momentum and low correlation.
Long term trends in diversified assets can yield smoother returns
Four Points Advisors believes long term wealth is best created by capturing long term trends.
Portfolio diversification allows our Indexes to rebalance into assets exhibiting low or negative correlation to other holdings to try to capture positive trends.
The Index does not attempt to chase short-term market moves, as those incur higher trading costs and may ultimately reduce overall returns.
FPMI takes portfolio diversification and protection of open-trade gains into consideration for long term wealth creation.
Market and sector ETFs vs individual stocks
We maintain that highly liquid market and sector ETFs capture trends within industries, while reducing single-stock volatility and variability. Our research has demonstrated that there can be too much noise in an individual stock that changes over time. Utilizing market and sector ETFs tend to be more predictable, and have exhibited repeatable correlations and trends.
FPMI's trading universe of ETFs has been carefully constructed for a high annualized portfolio Sharpe ratio. This allows the Indexes to re-allocate capital to liquid, and low or negatively-correlated assets in an attempt to predictably capture trends, and grow capital with a lower overall portfolio volatility.
How does the Momentum Index perform?
The FPMI is built for absolute returns. In our testing the indexes generally outperform in “risk off” markets (down markets).
This happens, in part, because we do not believe in riding out long structural broad-market declines, and alternatively search for other trending asset classes.
Investors that ride out extensive market declines, may need many months, or years, to recover from these down-turns.
During “risk-on” markets, the Index is formulated to perform as well as, or outperform, broad based equity indices.
How long should I invest in the Momentum Index?
We suggest a long-term investment horizon of a full investment cycle, or ideally 7+ years.
Four Points aims for absolute long-term growth of capital, and, by out-performing during market downturns, this absolute long term capital growth advantage becomes more apparent.
The Momentum Indexes are designed to outperform broad-based benchmarks over the course of full-market cycles, with lower correlations of relative returns to traditional growth strategies, and negative correlations of relative returns to traditional value strategies.