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Investment Strategies
Proprietary Active Investment Strategies for the Discriminating Investor
When it comes to investing, there's never been one perfect approach. Markets go through cycles. They evolve and change over time. The strategies that work today may underperform next year, or even next month.
By utilizing a variety of active, top down strategies, our mission at Heritage Capital is to provide clients with strong returns throughout the full market cycle. Our clients benefit from "strategy diversification" as well as asset diversification.
Heritage Capital employs proprietary "active strategies" that are designed to take advantage of changing opportunities in the market, while preserving capital. We achieve this through our unique ability to tactically reposition assets when risk begins to outweigh reward.
Our individual strategies use a variety of non-emotional, quantitative decision rules based on hundreds of market indicators tracked by Heritage Capital on a daily basis. While some of our strategies trade frequently, others are maintained using a longer term time horizon.
We do not offer buy-and-hold investing or fixed asset allocation portfolios. Static investing, in our opinion, has far too much risk and few ways to limit the impact of significant market downturns.
But since our services are fee-based, frequency of trading has no impact on how we are compensated. Investment decisions are based solely on their perceived merit to the long-term value of the client's portfolio.
"I am personally not comfortable with the risk associated with buy-and-hold investing in my own portfolio. If I can't tolerate that kind of volatility, I certainly cannot expect my clients to." - Paul Schatz, President
Client portfolios are managed using a blend of our proprietary strategies designed to optimize return for a given level of risk that is acceptable to the individual. This blend is established after we have an opportunity to speak with our clients about specific needs, goals, risk tolerance and financial condition.
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| Heritage Capital's CONSERVATIVE Investment Strategies |
| Capital preservation outweighs appreciation in these investment approaches, followed by the goal of producing a respectable rate of return. |
Short-Term Gold Equities Program | High Yield Bond Program
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Heritage Capital's
Short-Term Gold Equities Program is a concentrated, risk managed sector program
designed to participate in the short and intermediate-term rallies in the PHLX
Gold/Silver Index (XAU) using the Gold Miners ETF, Rydex Precious Metals Fund
and similar gold related instruments. When short and intermediate-term price
declines occur, our objective is to position client assets in the safety of
money market funds. Capital preservation and appreciation have similar weights
in this actively managed strategy, but volatility and drawdowns are
significantly below historical levels through the use of tight and stringent
stop losses on all positions.
This program is non-correlated to the U.S. stock market. Through its focus on
short and intermediate-term moves, it has the potential to produce gains
regardless of the longer-term market direction for precious metals mining
companies.
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| Heritage Capital's High
Yield Bond Program employs an intermediate-term momentum model that buys and
sells appropriate high yield ETFs and mutual funds. Our goal is to participate
in the high yield bond market with lower risk. Strict stop loss protection is a
key element of this strategy to keep drawdowns at a minimum. The High Yield Bond
Program offers capital appreciation, capital preservation and dividends.
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Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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| Heritage Capital's CONSERVATIVE/MODERATE Investment Strategies |
| These programs seek capital appreciation with lower volatility while reducing the overall portfolio risk of a market downturn, which could erode your principal.
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Spectrum Program | Global Asset Allocation | Dividend Income & Growth
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Our version of a multi
strategy portfolio, this program combines four largely non-correlated strategies
into one simplified plan, High Yield Bond, Short-Term Gold Equities, Relative
Strength Sector and Diversified Growth for the wide diversification across our
universe. Each of the four programs account for 25% of the overall Spectrum
portfolio.
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Based on the time-tested
and highly successful Yale endowment model, this top down, actively managed,
quantitative strategy offers diversified exposure to the global financial system
across multiple asset classes. Primarily using exchange traded funds (ETFs), the
world is broken down into U.S. equities, international equities, fixed income,
commodities, currencies, real estate and private equity for weekly portfolio
rebalances.
This long only program seeks to outperform the overall market with
lower volatility and drawdowns from the use of non emotional, diligently
researched, multi factor alpha signals and strict position limits. With low
correlation to the U.S. stock market, capital preservation and appreciation have
equal weights.
By reducing position limits, this strategy can be employed with
lower overall risk, which is more in line with our other conservative programs. |
This strategy begins with
a 50% core holding in lower volatility dividend paying exchange traded funds
(ETFs), usually in equities. As stock market conditions dictate, additional
dividend paying ETFs may be added that hold equities, convertible bonds,
preferred stocks, master limited partnerships (MLPs) and other dividend paying
securities.
When the stock market climate indicates higher than normal risk, the core
holdings can be hedged with ETFs and mutual funds that profit when a given index
declines. Additionally, in extreme cases of risk, the hedge may be in the form
of leveraged, inverse ETFs, which profit when a given index declines and sets
the portfolio to have negative exposure to the stock market (short position).
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Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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| Heritage Capital's MODERATE Investment Strategies |
| These programs seek market rates of return while reducing the overall portfolio risk of a market downturn, which could erode your principal. |
Diversified Growth Program | Relative Strength Sector Program
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This is a top down, risk
managed index strategy with the ability to take long, short and neutral
positions in the S&P 500, S&P 400, Russell 2000 and NASDAQ 100 or Rydex index
funds that track the various indices. Two distinct and independent models are
used in this strategy; one that focuses on the long-term, while the other looks
at the intermediate-term. Both models have trend following as well as mean
reversion rules to account for the different market environments.
The strongest performance periods occur when both models are in agreement and
weakness is bought or strength is sold. Positions are typically held from a few
weeks to several months.
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Each week from a large
universe, Heritage Capital's proprietary computer models select one to four top
performing U.S. market sectors, including cash, that indicators predict offer
the highest potential reward. This actively managed strategy is then implemented
using exchange traded sector funds and the Rydex sector funds as well as sector
funds within variable annuities from Jefferson National, Security Benefit Life
and Nationwide's MarketFlex.
Positions are modified and rebalanced as often as weekly to meet our goal of
investing assets in the top performing sectors. Although this is a
trend-following strategy, the risk management component uses mean reversion
looking at the overall market and begins to impact investment decisions when any
two of our three market models go negative. Capital appreciation far outweighs
preservation in this approach.
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Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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| Heritage Capital's AGGRESSIVE Growth Strategies |
| Heritage aggressive growth programs are designed to capture "alpha," returns above and beyond those available from the equity markets as a whole. These programs tolerate a much higher level of volatility, as capital preservation is incidental compared to the sole focus on appreciation.
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Developed Markets Program | Emerging Markets Program
Aggressive Gold Equities Program | S&P 500 Aggressive Growth Program
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| Heritage Capital's
Developed Markets Program invests in the equity markets of established economies
outside of the U.S., such as Australia, Canada, France, Germany, Italy, Japan,
and United Kingdom. Each week, our proprietary computer models select from a
universe of exchange traded funds (ETFs) one to three top performing developed
markets that appear to offer the highest potential reward. Capital appreciation
far outweighs preservation in this actively traded strategy using ETFs. |
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emerging market country exchange traded funds (ETFs), which include Brazil,
China, Hong Kong, India, Mexico and Russia, Heritage Capital's proprietary
computer models select one to three top performing markets that offer the
highest potential reward. Positions are reviewed and updated weekly, or even
daily if circumstances warrant faster action. Trend following and mean reversion
indicators place key roles in trading decisions. Capital appreciation far
outweighs preservation in this actively traded, aggressive strategy using ETFs. |
The Aggressive Gold
Equities Program is a long and cash, classic mean reversion based strategy that
utilizes the Rydex Precious Metals Fund and similar ETFs to express its view.
Designed to participate in the intermediate-term rallies in the PHLX Gold/Silver
Index (XAU), this concentrated program seeks to buy weakness and sell strength
using various conventional technical indicators in a proprietary fashion. Trades
last as little as a week to a few months depending on market conditions.
Research has shown that the most profitable trades tend to lean towards the
shorter term, while the largest drawdowns usually involve longer holding
periods.
This strategy has an aggressive risk/reward profile with
moderate correlation to the price of gold and the gold & silver mining stocks.
It is non-correlated to the U.S. stock market. |
The S&P 500 Aggressive
Growth Program is a very aggressive long, short and cash strategy designed to
produce positive returns regardless of market conditions over a period of 12-18
months while significantly reducing overall stock market exposure.
First, the strategy determines the overall, long-term trend of the S&P 500.
Intermediate trend is then analyzed to determine periods of agreement with the
long-term trend, in which case, trading opportunities will exist when the
short-term trend moves against the intermediate and long-term trends. If the
intermediate trend is not in agreement with the long-term trend, the model will
remain in the safety of the Money Market fund.
Two beta (leveraged) mutual funds and/or ETFs are employed to
express our view and achieve the aggressive nature of the program. This strategy
has a very aggressive risk/reward profile and is not correlated to the U.S.
stock market. |
Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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Heritage Capital, LLC (HC) is a state of Connecticut registered investment adviser located in Woodbridge CT. HC and its representatives are in compliance with the current filing requirements imposed upon state registered investment advisors by those states in which HC maintains clients.
HC may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. HC's web site is limited to the dissemination of general information pertaining to its investment advisory services. Accordingly, the publication of the HC's web site on the Internet should not be construed by any consumer and/or prospective client as HC's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Any subsequent, direct communication by HC with a prospective client, shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of HC, please contact the SEC and/or the state securities law administrators for those states in which HC maintains a notice filing.
A copy of HC's current written disclosure statement discussing HC's business operations, services, and fees is available from HC upon written request. HC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to HC's web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
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© 2015 Heritage Capital, LLC.