Frequently Asked Questions
1. How does PPS work?
Its very simple, we develop a customized exchange traded fund (ETF) portfolio for you. When our long-term indicators tell us we are in a Bull Market, we are 100% invested. When they signal a Bear Market, we move to cash, treasuries or gold. Treasuries can be up to 50% of your portfolio value and gold up to 10% during these Bear Market periods.
2. What do you mean by a customized portfolio?
We look at your specific risk and return requirements, age, and goals and objectives and develop a customized asset allocation for you using low cost, low tax ETF securities. We use optimizer models to determine the exact mix of ETF securities.
3. How do you determine market turning points?
We have been using trend following models for years in our other strategies. In this case, we are adapting a long-term trend following model to determine bull or bear market phases. To date this model has been very accurate.
Because its a long-term trend following model, it tends to be slow to find new bull or bear markets, but it does get it right most of the time.
4. What would be the impact on my portfolio of avoiding Bear Markets?
Well obviously no two economic periods are the same, but in our research going back almost 20 years, we found that the simple act of moving aside in Bear Markets using our long-term trend following model added almost 3% to a client’s long-term returns.
The question I have for any client is why not do it if the model is sound and it can add so much for so little effort to your long-term returns.
5. How do you determine whether to move to cash or treasuries or gold?
Everything we do is technical in nature and we use traditional technical analysis using charts and indicators to determine whether to just hold cash in a Bear Market or to diversify and hold treasuries and gold. We generally hold the latter two holdings, in addition to cash, in during the first half of a Bear Market, but this is just an observation and not a rule.
6. How do you limit risk in the portfolio?
Well for starters, we build a diversified portfolio of ETF holdings. Additionally each ETF is also a diversified pool of securities of their own. So if we hold 5 ETF securities for example, we are probably really holding more than 300 securities in these 5 ETF securities.
Secondly, we limit concentrations in any one ETF position in the portfolio. Finally, we use stop losses orders on all portfolio positions.
7. How do you set stop loss positions?
Stop loss positions are generally set based on a price channels of the past 20 days trading. Stop losses are generally set based on the past 20 trading days low or the bottom of the price channel. For some more sector oriented or aggressive positions, we may trail a stop based on past technical support areas or other techniques to limit losses or maintain a gain.
8. What is the minimum account size and fee structure?
Our minimum account size is $100,000 per account. We charge a fee of 1% on the first $1 million in assets and .75% on assets above this amount.
9. Are these portfolios tax efficient?
Yes, during Bull Markets. There is very little turn over and ETF securities are generally very tax efficient.
However, when we get the Bear Market signal we do move the cash. This is generally, depending on the account type, a taxable event to the extent of the unrealized capital gains.
10. How are InTrust’s services available?
InTrust’s services are available directly or through a growing network of participating broker/dealers, independent financial advisers, and CPA firms across the country.
