THE FUSION PROCESS®
Our consistent, disciplined investment model utilized in all of our investment products integrates three key areas that enable the investment team to proactively respond to rapidly changing global markets: Fundamental Analysis, Behavioral Finance and Global Themes. Focusing on Exchange Traded Funds (ETFs), investment decisions are predominantly made using a top-down approach.
Click on any step in the process for more details.
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Our research begins with using the Fusion Process® model to screen through fundamental data on a broad range of ETFs.
Screens include price-to-earnings, price-to-book value, earnings growth, dividend yield, and historical risk/return relationship.
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Next, analysis is conducted on behavioral factors we believe are influencing an ETF's price.
Behavioral Finance can provide important clues about the dynamics between an asset's fundamental value and short-term price swings. Technical analysis and investor sentiment screens are used including relative strength, money flow and moving averages.
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An in depth review of macroeconomic conditions across the world is conducted, and global themes are ranked in order of greatest expected return.
We focus on economic indicators, business cycles, and industry/sector trends to form an outlook. ETFs with a high attractiveness score from steps 1 and 2 are cross-referenced with our top ranked global themes to create a buy list. In the Long/Short fund, our short positions are selected in the reverse fashion.
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For a new position, 50% of the target allocation is typically purchased (or sold short) to establish a core position. The remainder of the position is scaled into over time.
This often enhances the entry point through taking advantage of market volatility. In addition, trades are placed using block trades and limit orders to further enhance trade execution and take advantage of wide bid/ask spreads.
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Ongoing due diligence takes place on open positions to confirm thesis and continuously test assumptions.
Based on market conditions the fund will scale in/out of positions to take advantage of market volatility, while keeping the position within the target range. Tax-Loss harvesting is considered thoughout the trading process, with every fund undergoing a formal review process each December.
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Sales occur when the attractiveness score and/or thesis for the position significantly changes.
We will also close a position if a soft stop-loss is triggered with an 8% decline*. In this case, the position is reevaluated and may be liquidated and/or restricted from further investment. Finally, we may replace a position by one with a higher attractiveness score.
*A "soft stop-loss" is a price level that triggers an internal review which may or may not result in exiting a position.
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