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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 |
| An investment portfolio with Conservative objectives is characterized by substantial risk aversion. Minimizing volatility is a clear priority over growth. A Conservative portfolio may be appropriate for persons with a relatively short time horizon (under 5 years), with a need for more predictable income or, notwithstanding a longer time horizon, with a high sensitivity to short-term volatility. Over time portfolios with a Conservative objective can be expected to produce low average total returns on investment but have relatively low volatility. Investors with a Conservative objective are willing to sacrifice substantial return potential for long-term capital preservation. |
High Yield Bond Program | High Yield Bond Plus Program | Emerging Markets Bond Program
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Heritage Capital's High Yield Bond Program
employs an intermediate-term momentum model that buys and sells appropriate high yield and floating
rate bond mutual funds. Our goal is to participate in the high yield bond market with lower risk
and less exposure to interest rates. 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 without the typical bond risk from rising interest rates.
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| Heritage Capital's High Yield Bond Plus
Program employs a short-term momentum model that buys and sells appropriate high yield bond exchange
traded funds. Our goal is to participate in the high yield bond market with lower risk and less
exposure to interest rates. Strict stop loss protection is a key element of this strategy to keep
drawdowns on the modest side. The High Yield Bond Plus Program offers capital appreciation,
capital preservation and dividends without the typical bond risk from rising interest rates.
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| Heritage Capital's Emerging Markets
Bond Program employs a short-term momentum model that buys and sells appropriate emerging markets /
sovereign debt exchange traded funds. Our goal is to participate in the emerging markets bond market
with lower risk and less exposure to interest rates and currency exchange rates. Strict stop loss
protection is a key element of this strategy to keep drawdowns on the modest side. The Emerging
Markets Bond Program offers capital appreciation, capital preservation and dividends without
the typical bond risk from rising interest rates and fluctuating currency exchange rates.
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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 BALANCED Investment Strategies |
| Portfolios with a Balanced objective are characterized as having dual goals. Balanced portfolios typically exhibit moderate growth of capital while simultaneously dampening volatility. Many holders of Balanced portfolios will have an intermediate time horizon of 5 to 10 years. They are willing to forego significant return potential in order to achieve more predictable income and total returns on investment. |
Short-Term Gold Equities Program |
Best of Bonds Program |
Strategic Active Asset Allocation Program |
Global Active Asset Allocation Program |
Dividend Income & Growth
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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 Best of Bonds Program
employs short-term and intermediate-term momentum models to indicate which fixed income sector has
the better likelihood of rising between high yield bonds (risk on) and treasury bonds (risk off).
It then buys and sells appropriate high yield and long-term Treasury bond exchange traded funds.
When neither sector offers a positive risk/reward ratio, the portfolio will be invested in short-term
cash equivalents.
Our goal is to participate in the bond market sector that offers the best risk/reward
ratio with lower risk and less exposure to interest rates. Stop loss protection is a key element
of this strategy to keep drawdowns on the moderate side. The Best of Bonds Program offers capital
appreciation, capital preservation and dividends without the typical bond risk from rising
interest rates. |
| Heritage Capital's Strategic Active Asset
Allocation Program first begins with a periodically updated allocation between equities and fixed
income. From there actively managed exchange traded funds and mutual funds that have internal capital
protection strategies are chosen from a small pool. The Strategic Active Asset Allocation Program
offers capital appreciation and dividends and seeks to keep drawdowns well below the popular indices.
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Heritage Capital's Global Active Asset
Allocation is 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. Using index based mutual funds and exchange traded funds (ETFs),
the world is broken down into U.S. equities, international equities, fixed income, commodities,
currencies and real estate for weekly portfolio rebalances.
This long only strategy seeks to offer competitive returns to the traditional 60/40
equities to fixed income blend 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 outweighs appreciation and dividend income is
also a benefit.
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Heritage Capital's Dividend Income & Growth
Program begins with a 60% 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 and mutual funds, which profit when a given index declines and sets the
portfolio to have negative exposure to the stock market (short position).
The Dividend Income & Growth Program offers capital appreciation,
a steady stream of dividend income with less of a focus on capital preservation.
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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 CAPITAL APPRECIATION Investment Strategies |
| Investment portfolios with a Capital Appreciation objective involve a fair degree of risk in order to achieve higher long-term total returns on investment. Growth of capital is a clear priority over minimizing portfolio volatility. Investors with a Capital Appreciation objective understand, and are comfortable with the fact that short-term volatility is a price to be paid for higher long-term returns. Investors who choose Capital Appreciation as an objective generally have a long-term time horizon, e.g. 10 years or more, and/or they wish to take advantage of the higher returns potentially offered by more volatile asset classes. |
Diversified Growth Program | Relative Strength Sector Program
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Heritage Capital's Diversified Growth is a top down,
risk managed index strategy with the ability to take long, short and neutral positions in the Dow Jones Industrials,
S&P 500, S&P 400, Russell 2000 and NASDAQ 100 as expressed by exchange traded funds or index mutual 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 Diversified Growth Program focuses primarily on capital appreciation with capital preservation
coming on an opportunistic basis.
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Heritage Capital's Relative Strength Sector
Program employs a proprietary computer model to select one to four top performing U.S. market sectors,
including cash, that indicators predict offer the highest potential reward over the intermediate-term.
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
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.
The Relative Strength Sector Program focuses primarily on capital appreciation
unless our stock market models call for preservation to be blended in.
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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 |
| An Aggressive Growth portfolio provides the highest reasonable long-term total returns on investment and, at the same time, the greatest short-term capital risk. Aggressive Growth investors are aware of, and comfortable with, the significant risk volatility that high-return asset classes may produce over the short run. Most investors in Aggressive Growth portfolios have a time horizon in excess of 10 years. Long-term growth is clearly their highest priority and short-term volatility is viewed as being a price to be paid for the high potential growth. |
Spectrum Program |
Emerging Markets Program
Aggressive Gold Equities Program |
Aggressive Growth Program
S&P 500 Aggressive Growth Program
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Heritage Capital's Spectrum Program uses
two proprietary models to allocate among our 14 other programs. On the first trading day of every
month, these models select one or two programs with the lowest probability to decline until the
next allocation the following month. Although any of the other programs may be chosen, the program
must be considered aggressive since four aggressive programs are in the universe.
From month to month The Spectrum Program can offer, capital appreciation,
capital preservation and dividends.
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Heritage Capital's Emerging Markets Program
employs a proprietary momentum computer model that chooses from a universe of emerging market country
exchange traded funds (ETFs), which include Brazil, China, Hong Kong, India, Mexico and Russia for a
weekly rebalance that results in one to three top performing markets which offer the highest potential
reward. Trend following and mean reversion indicators play key roles in trading decisions.
The Emerging Markets Program focuses primarily on aggressive growth although capital
preservation has a role when the overall emerging markets complex is confirmed to be in a bear market.
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Heritage Capital's Aggressive Gold Equities
Program is a long and cash, classic mean reversion based strategy that utilizes the Rydex Precious
Metals Fund and similar exchange traded funds (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.
The Aggressive Gold Equities Program focuses on aggressive growth with
moderate correlation to the price of gold and the gold & silver mining stocks.
It is non-correlated to the U.S. stock market.
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Heritage Capital's S&P 500 Aggressive
Growth Program is a very aggressive, leveraged long, short and cash strategy designed to produce
positive returns regardless of market conditions over a 3-5 year period 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 cash equivalents like money market funds.
The S&P 500 Aggressive Growth Program uses two beta (leveraged) mutual funds
and/or ETFs to express our view and achieve the very aggressive nature of the program.
Because of the leverage, drawdowns may be large and significant. This strategy is not
correlated to the U.S. stock market.
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Heritage Capital's Aggressive Growth Program
is a very aggressive, leveraged long, short and cash strategy designed to produce positive returns
regardless of market conditions over a 3-5 year period. The strategy has four proprietary models
analyzing momentum, sentiment, trend and seasonal factors to determine if a long or short position
should be undertaken followed the position size.
The Aggressive Growth Program uses two beta (leveraged) mutual funds and/or ETFs to
express our view and achieve the very aggressive nature of the program. Because of the leverage,
drawdowns may be large and significant. This strategy is not correlated to the U.S. stock market.
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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, 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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© 2019 Heritage Capital, LLC.