Tactical Allocation

smarttactical™ 

Corbett Road provides several smarttactical™ Strategies that are propelled by two proprietary investment risk models (macrocast™ and microcast™). We refer to these as smarttactical™ because the trades within the strategies are not just made for the sake of being tactical, but due to our data-driven methodology that we believe is a ‘smarter’ approach. These strategies have the ability to invest in any exchange traded asset class and are not restricted by market cap, sector, or geographic location. They may also hold a substantial fixed income or cash position based upon our macrocast™ or microcast™ indicators.

Our macrocast™ risk model examines data across 6 categories (the “VITALS”) that we believe impact broad market conditions. Within the VITALS we examine more than 20 specific indicators that drive the macrocast™ Score. These indicators are then assessed and classified as signaling a positive (+1), neutral (0), or negative (-1) trend. The final macrocast™ Score is the result of the summation of the classified indicators.

Our microcast™ risk model examines data across 4 categories (“TUMS”) that we believe impact near to intermediate-term market conditions. microcast™ assesses more than 10 specific indicators within these four categories. Each of the indicators are designed to give positive or negative signals that, in aggregate, generate the microcast™ optimal risk allocation. This determines the allocation split between equity and defensive assets within the strategy.

Asset Allocation

Asset allocation is an investment approach that aims to balance risk by dividing assets among major categories such as cash, bonds, stocks, and real estate. Furthermore, the goal is to divide your investment dollars among asset categories that do not all respond to the same market forces in the same way at the same time. While one asset category increases in value, another may decrease or may not increase as much. The risk-return tradeoff lies at the core of this approach.

Fundamental Analysis

In addition to our macrocast™ and microcast™ analysis, we utilize fundamental analysis throughout our equity selection process. This process primarily seeks and is driven by three segments.

Titans

One that is gigantic in size or power; one that stands out for greatness of achievement.

The foundation of the portfolio is built on the back of Titans. These are generally large, established businesses, with sustainable competitive advantages that support consistent revenue growth, predictable earnings, and high return on invested capital (ROIC). Titans are generally seen as longer-term investments in companies that will likely still be leaders over the next 10 years.

Trailblazers

One who must pave a path for themselves. A trailblazer may not have the same opportunity or leg up as others but isn't afraid to blaze the trail and not look back.

Trailblazers are generally younger or smaller companies. They are in the building phase of their growth cycle, often reinvest heavily into their own business, and have a long runway ahead. Typically, these are growth or momentum-style investments that offer innovative products or services. They have accelerating earnings or sales growth, exhibit relative strength, and expect margin expansion as they finish laying the groundwork.

Turnarounds

One that is experiencing an abrupt or unexpected change, especially when that change results in a more favorable situation.

Turnarounds are generally value style investments that are trading at discounted valuations with improving economic prospects. They can also be cyclical stocks that tend to outperform during certain stages of the economic cycle.

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