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Investment Strategies
Proprietary Active Investment Strategies for the Discriminating Investor
When it comes to investing, there's never been one perfect approach. Markets go through cycles. They evolve and change over time. The strategies that work today may underperform next year, or even next month.
By utilizing a variety of active, top down strategies, our mission at Heritage Capital is to provide clients with strong returns throughout the full market cycle. Our clients benefit from "strategy diversification" as well as asset diversification.
Heritage Capital employs proprietary "active strategies" that are designed to take advantage of changing opportunities in the market, while preserving capital. We achieve this through our unique ability to tactically reposition assets when risk begins to outweigh reward.
Our individual strategies use a variety of non-emotional, quantitative decision rules based on hundreds of market indicators tracked by Heritage Capital on a daily basis. While some of our strategies trade frequently, others are maintained using a longer term time horizon.
We do not offer buy-and-hold investing or fixed asset allocation portfolios. Static investing, in our opinion, has far too much risk and few ways to limit the impact of significant market downturns.
But since our services are fee-based, frequency of trading has no impact on how we are compensated. Investment decisions are based solely on their perceived merit to the long-term value of the client's portfolio.
"I am personally not comfortable with the risk associated with buy-and-hold investing in my own portfolio. If I can't tolerate that kind of volatility, I certainly cannot expect my clients to." - Paul Schatz, President
Client portfolios are managed using a blend of our proprietary strategies designed to optimize return for a given level of risk that is acceptable to the individual. This blend is established after we have an opportunity to speak with our clients about specific needs, goals, risk tolerance and financial condition.
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Short-Term Gold Program | High Yield Bond Program
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Heritage Capital's Short-Term Gold Program is a risk managed sector mutual fund program designed to participate in the short and intermediate-term rallies in the PHLX Gold/Silver Index (XAU) using the Rydex Precious Metals Fund. When intermediate-term price declines occur, our objective is to position client assets in the safety of money market funds. Capital preservation and appreciation have similar weights in this actively managed strategy, but volatility and drawdowns are significantly below historical levels through the use of tight and stringent stop losses on all positions.
This program is non-correlated to the U.S. stock market. Through its focus on short and intermediate-term moves, it has the potential to produce gains regardless of the longer-term market direction for precious metals mining companies.
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| Heritage Capital's High Yield Bond Program employs a short-term momentum model that buys, sells, and shorts appropriate high yield ETFs and mutual funds from State Street, Barclays, Rydex, ProFunds and Direxion. Our goal is to participate in the high yield bond market with lower risk. Strict stop loss protection is a key element of this strategy to keep drawdowns at a minimum. The High Yield Bond Program offers capital appreciation, capital preservation and dividends.
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Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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| These programs seek market rates of return while reducing the overall portfolio risk of a market downturn, which could erode your principal. |
Global Asset Allocation | Spectrum Program | Diversified Growth Program | Relative Strength Sector Program
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Based on the time-tested and highly successful Yale endowment model, this top down, actively managed, quantitative strategy offers diversified exposure to the global financial system across multiple asset classes. Primarily using exchange traded funds (ETFs), the world is broken down into U.S. equities, international equities, fixed income, commodities, currencies and real estate for weekly portfolio rebalances.
This long only program seeks to outperform the overall market with lower volatility and drawdowns from the use of non emotional, diligently researched, multi factor alpha signals and strict position limits. With low correlation to the U.S. stock market, capital preservation and appreciation have equal weights.
By reducing position limits, this strategy can be employed with lower overall risk, which is more in line with our other conservative programs.
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| Our version of an asset allocation strategy, this program combines four of our most non-correlated strategies into one simplified plan, High Yield Bond, Short-Term Gold, Relative Strength Sector and Diversified Growth for the widest diversification possible in our universe. Each of the four programs account for 25% of the overall Spectrum portfolio. |
This is a top down, risk managed index strategy devoted to going long (buying) and short (short selling) the S&P 500 (SPY), S&P 400 (MDY), Russell 2000 (IWM) and NASDAQ 100 (QQQQ) or Rydex index funds that track to mimic the various indices. Two distinct and independent models are used in this strategy; one that focuses on the long-term, while the other looks at the intermediate-term. Both models have trend following as well as mean reversion rules to account for the different market environments.
The strongest performance periods occur when both models are in agreement and weakness is bought or strength is sold. Positions are typically held from a few weeks to several months.
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Each week from a large universe, Heritage Capital's proprietary computer models select one to four top performing U.S. market sectors, including cash, that indicators predict offer the highest potential reward. This actively managed strategy is then implemented using exchange traded sector funds and the Rydex sector funds as well as sector funds within variable annuities from Jefferson National, Security Benefit Life and Nationwide's MarketFlex.
Positions are modified and rebalanced as often as weekly to meet our goal of investing assets in the top performing sectors. Although this is a trend-following strategy, the risk management component uses mean reversion looking at the overall market and begins to impact investment decisions when any two of our three market models go negative. Capital appreciation far outweighs preservation in this approach.
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Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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| Heritage aggressive growth programs are designed to capture "alpha" returns above and beyond those available from the equity markets as a whole. These programs tolerate a much higher level of volatility, as capital preservation is incidental compared to the sole focus on appreciation. |
Developed Markets Program | Emerging Markets Program | Intermediate-Term Gold Program
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| Heritage Capital's Developed Markets Program invests in the equity markets of established economies outside of the U.S., such as Australia, Canada, France, Germany, Italy, Japan, and United Kingdom. Each week, our proprietary computer models select from a universe of exchange traded funds (ETFs) one to three top performing developed markets that appear to offer the highest potential reward. Capital appreciation far outweighs preservation in this actively traded strategy using ETFs. |
| From a universe of emerging market country exchange traded funds (ETFs), which include Brazil, China, Hong Kong, India, Mexico and Russia, Heritage Capital's proprietary computer models select one to three top performing markets that offer the highest potential reward. Positions are reviewed and updated weekly, or even daily if circumstances warrant faster action. Trend following and mean reversion indicators place key roles in trading decisions. Capital appreciation far outweighs preservation in this actively traded, aggressive strategy using ETFs. |
The Intermediate-Term Gold Program is a long and cash, classic mean reversion based strategy that utilizes the Rydex Precious Metals Fund and similar ETFs to express its view. Designed to participate in the intermediate-term rallies in the PHLX Gold/Silver Index (XAU), this concentrated program seeks to buy weakness and sell strength using various conventional technical indicators in a proprietary fashion. Trades last as little as a week to a few months depending on market conditions. Research has shown that the most profitable trades tend to lean towards the shorter term, while the largest drawdowns usually involve longer holding periods.
This strategy has an aggressive risk/reward profile with moderate correlation to the price of gold and the gold & silver mining stocks. It is non-correlated to the U.S. stock market. |
Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain. |
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Heritage Capital, LLC (HC) is a SEC registered investment adviser located in Woodbridge CT.
HC and its representatives are in compliance with the current filing requirements imposed upon SEC registered investment advisors by those states in which HC maintains clients.
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to its investment advisory services. Accordingly, the publication of the HC's web site on the Internet should not be
construed by any consumer and/or prospective client as HC's solicitation to effect, or attempt to effect transactions in securities,
or the rendering of personalized investment advice for compensation, over the Internet.
Any subsequent, direct communication by HC with a prospective client, shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of HC, please contact the SEC and/or the state securities law administrators for those states in which HC maintains a notice filing.
A copy of HC's current written
disclosure statement discussing HC's business
operations, services, and fees is available from HC upon
written request. HC does not make any representations or
warranties as to the accuracy, timeliness, suitability,
completeness, or relevance of any information prepared
by any unaffiliated third party, whether linked to HC's
web site or incorporated herein, and takes no
responsibility therefore. All such information is
provided solely for convenience purposes only and all
users thereof should be guided accordingly.
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© 2012 Heritage Capital, LLC.