Disclaimer for charts: Investors cannot invest directly in an index. Past performance is no guarantee of future results. Strategies striving to mirror an index will have different returns due to tracking error, management fees and trading expenses. STIR Research is intended for a professional audience for informational purposes only and is not a recommendation to buy or sell any security, nor is it intended as specific advice for any individual investor’s portfolio. STIR is NOT a registered investment advisor or broker-dealer. STIR provides experienced independent quantitative research.

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Introduction to STIR Research Groups

 

The investment industry is remarkably vibrant and incredibly demanding – it needs to be. Information is measured in seconds. Processes are calibrated in real time. Innovation transforms. Investors and advisors are demanding financial information and the resources to make a more informed decision. And increasingly, the Web is seen as the best source for timely news, objective commentary, and useful interactive research tools.

 

STIR Research provides these products and services through an internet subscription service. With three tactical and absolute return portfolio groups, and five Index portfolios. STIR covers virtually every market segment.

 

The STIR portfolio groups and the individual models located within the groups, have particular goals with set parameters they wish to achieve. The tactical research models that we cover in-depth are different in their own way but have one common denominator, quantitative analysis.

 

While the stock market has historically provided superior returns over the long-term, it will experience lengthy cycles of strong returns and weak returns, secular bulls and secular bears. We need a strategy to cope with all types of markets (weak or strong, secular bull or secular bear) when they occur.

 

STIR Research applies tactical allocation and absolute return portfolios to the equity and bond markets. Divide and Conquer, by breaking the overall market into smaller manageable parts, apply a consistent method of analysis to achieve a return that is greater than the overall market and with less risk. The goal of tactical allocation is to achieve more consistent, Higher Returns with Less Risk.

Preferred Fund Family Research

 

Investment options within fund and variable annuity families have never been more complex. The STIR Preferred Fund Families (PFF) have gone the extra mile to add more choices for the tactical and absolute managers than any other fund families. This explains the reason that they stand alone in being the fastest growing of the hundreds of fund families available. In addition to serve tactical allocation practitioners, these fund families offer an unlimited amount of exchanges an advisor or institutional investor may make. The Preferred Fund Families serve the best interests of both the traditional strategic advisor and the more sophisticated needs of the tactical advisor.

 

Equity investment choices available cover all style boxes, all of the major sectors and a diverse group of internationals. Unique to these families is the ability to participate in the short inverse funds side of various market segments: S&P 500, Nasdaq 100, Dow, style boxes, and long term bonds.

 

STIR; building on our research team of real time experience since 1969, has applied quantitative analysis in building our  diversified models within each of the Preferred Fund Families (similar funds are available within many Variable Annuity Families).

 

  • Aggressive Models: These portfolios seek an absolute return in all market environments. Comprised of four different absolute return models to provide diversification between equity and interest rate markets. These modes may be either fully invested, partially invested or short, market neutral, or 100% short depending on the tactical indicators for each of the sub models.

  • Moderate Models: With a moderate investment objective these models hold four equity positions selected from the leaders within style boxes (maximum of 3), sectors (no more than 1), and internationals (maximum of 2). Normally they will be 100% invested, but when our tactical analysis indicates a bear market environment, the models can be 50% short and have a 50% money market position.

  • Conservative Models: Conservative seeks capital appreciation through capital preservation. These portfolios are comprised of five different risk management models selected to provide broad diversification: two domestic equities, two internationals and one interest rate sensitive model. Each of the individual models can be either 100% invested or in money markets, therefore, the combined Conservative Models investment exposure will vary from being 100% long, to partially invested, to 100% money market.

  • International: Focuses in on a universe of +75 country and regional ETF's, seeking the five leaders each quarter for superior performance versus the All Country World Index ex U.S. Benchmark.

 

Unlike many portfolio recommendations of fixed allocations, STIR Research is tactical. Equity and bond selections, long or short, and the degree of portfolio exposure are adjusted as market conditions change. Model positions are monitored daily and when warranted adjustments are made.

Flexible Asset Allocation Research

 

Asset allocation decisions will account for 80% of a portfolios performance. STIR Research Flexible Asset Allocation (FAA) strives to build diversified portfolios by identifying the leading asset classes for portfolio inclusion and performance and to identify the lagging portfolio draining asset classes for exclusion, with the flexibility to change the allocations and exposure along with changes in the economy and the stock market. The STIR Flexible Asset Allocation (FAA) Research is universal in nature and not directed towards a specific fund family. Many investment platforms are available today that cover multiple families or ETF’s, where a multitude of asset classes are available.

 

STIR offers 10 different model portfolios in this group that are active and flexible. Each clearly identifies the leading asset classes for portfolio inclusion. Equity, bond selections, and allocations are constantly monitored and adjustments are made as leadership or the market changes. Each model represents a portfolio that allocates assets into leading asset groups demonstrating greater relative strength and momentum

 

Just how much will an active, flexible, asset allocation add in future investment returns, no one knows for sure? However, history being a very good guide, STIR maintains a goal that with a Flexible Asset Allocation you could add 4 to 6 percentage points (400 to 600 basis points) in annualized returns. And that can be significant if you are looking at the next 15 to 20 years, whether building to retirement or in retirement.

Fund Family Research

 

Investment options within fund and variable annuity families have never been more complex. To meet ever growing advisor and investor needs families have added dozens of fund choices from a multitude of different asset classes. Equity investment choices available often cover all style boxes, numerous sectors and internationals. It is not uncommon for many families to have 30, 40, and more excellent choices.

 

The STIR Research Fund Family Group of Models (FF) cover 9 prominent families representing almost 50% of all mutual fund assets. Fund Family portfolios are excellent stand-alone portfolios for a 100% tactical allocation. Also incorporating these models with a traditional ‘buy and hold’ strategy, and creating a more diversified ‘Core & Explore’ allocation.

 

To determine the right funds, STIR begins with Quantitative Analysis; striving to identify leading asset classes and ranking all the individual funds within those asset classes with the greatest potential for appreciation given current market conditions. By striving to identify the strongest funds, STIR can target those funds that represent the best opportunity for potential for growth. The goals are to outperform the average growth fund and the broad market indexes over time and with less risk. The fund and variable annuity specific tactical allocation model goals are to identify the top four performing funds within the family representing several different investment asset groups (style boxes, sectors, internationals, and specialty) of the market and to rotate into those strongest with the flexibility to change the asset mix as market conditions change. Diversification rules for the 4 equity positions are: no more than three different style boxes, no more than two internationals, and no more than two sector funds.

 

STIR maintains Relative Strength Analysis (RSA) and our overall STIR Market Environment Indicator (MEI) for each of the Fund Families we have chosen.