The LVRD Index (Low Volatility Rising Dividends) is unique among the universe of investments. It's the only tax-efficient, diversified, low volatility rising dividend index that seeks strong performance in up markets, but follows a defensive rule set that can go 75% cash in down markets with the goal of protecting the principal.
Diversified: Investors have poured hundreds of billions of dollars into low volatility or dividend paying ETF’s which are committed to a single asset class: like domestic large caps dividend payers only, or international low volatility stocks only or S&P 500 dividend payers only, etc..
The LVRD Index is unique in that it is globally diversified among five different low volatility and rising dividend asset classes. It strives to offer a smoother ride and a better risk/reward profile than the S&P 500 Index. The LVRD Index includes large cap, mid cap, international and equal-weight S&P 500 Index.
Rising Dividends: Over 40% of the stock markets total return typically comes from dividend income. All five of the ETF’s utilized within the LVRD Index have a history of rising dividends. Unlike a bond, which has a fixed payout, an equity portfolio of rising dividends over time can often produce a higher income stream.
Risk Management: The LVRD Index is risk managed (it can move to safety in severely falling markets) while all the other low volatility and dividend paying ETFs are committed to staying fully invested at aIl times. During the financial crisis from 2007 through 2009, losses of 40% to 50% were common among low volatility and dividend paying strategies. All of STIR Research indexes and research models are risk managed and avoided a significant portion of the losses during that period. (Read more under (Rule Set).
Tax Efficiency: The LVRD Index follows a rule set with the goal of avoiding whipsaws that can negatively impact tactical managers. It does this by over-weighting low volatility, dividend paying equities which seek to reduce short term volatility making it unnecessary to move in and out of the market so often. We advise patience when short term volatility occurs in the market, because it often bounces back. The Rule Set seeks to confirm a true, longer term bear market before moving 75% to cash; thereby avoiding whipsaws and creating more tax efficiency. However, when the bear market ends, the index is quick to get back in and seeks to let profits "run" and grow over the years. The last trade occurred on March 13th, 2009 in which the index moved back to 100% equities. It has been fully invested since that time, participating in the bull market in a tax efficient manner and without a single whipsaw.