“The average investor has been through a long period of minimal asset growth," said Ron Santangelo, managing director of Santangelo Investment Management and Research, and who is managing the fixed income and alternative components of the new indexes.
“In the last 15 years, we have had periods of attractive gains completely eliminated by market reversals,” Santangelo continued. “The goal of the AllWeather Indexes is downside risk mitigation; it’s not how much investors make on the upside, it’s what you keep on the downside that is crucial to long-term asset growth.”
F-Squared claims the new indexes hold great promise, since its flagship AlphaSector Premium Index gained 198% over the last nine years, whereas the S&P 500 rose 14%. Investment portfolios for retirees that tracked the AlphaSector index during that time were able to permit 8% annual withdrawal fees, double financial advisers’ recommended 4% annual withdrawal rates, said Howard Present, president and CEO of F-Squared Investments.
The new offerings are also an outgrowth of F-Squared's new AllWeather Advisory Board (see
F-Squared noted that for decades, the investment industry has relied on diversification and other modern portfolio theory concepts to manage risk and improve repeatability of annual withdrawal levels. But the two severe bear markets of the past decade have shown that diversification, while not broken, is also insufficient to meet the full needs of investors.
