Paula R. Wieck of CLS Investments, the Manager of Investment Research and Portfolio Manager, advocates the Shelter Fund for risk averse investors: “…[the] Shelter Fund is designed for investors who are either more emotional about large losses or have a shortened time horizon.” The fund has a series of “triggers”, each “Each trigger is initiated on a 2% decline in the NAV of the portfolio. During the first five triggers, we move portions of the equity portfolio to low-volatility ETFs, with a max position of 50% low volatility.”
The next 4 “triggers” send investors in the Shelter Fund into a greater exposure into low volatility ETFs, and then into cash. However, “…when the market has been fairly steady to rising, as it has been this year, the fund is currently invested 100% in equities.”
The most representative of the current Shelter Fund ETFs are value based: “For example, Shelter owns IEMG, which is just a broad emerging-market ETF. It is cap-weighted and gives you a nice well-rounded exposure to the emerging-market space. Then, we have IEFA, which provides broad developed international exposure. Then, where we selected value-factor exposure is through EFV, which is EAFE Value.”
For more information on Ms. Wieck’s portfolio strategy, read the entire interview at the Wall Street Transcript.
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