How Enhanced Dynamic® Works
Combining a proven, quantitative methodology with disciplined execution to deliver higher risk-adjusted returns. By strategically aligning your portfolio with market opportunities and minimizing unnecessary risks, we help you navigate market cycles with confidence and clarity.
The expectation of achieving much higher and sustainable risk-adjusted returns is accomplished by strategically over-weighting the in-favor style adherent actively managed U.S. equity managers and or index vehicles, while under-weighting the opposing out-of-favor and under-performing active managers or indices, according to the Enhanced Dynamic® methodology.
The Enhanced Dynamic® methodology is not a tactical asset allocation or market timing strategy. Equity portfolios utilizing Enhanced Dynamic® are to remain fully invested at all times. Enhanced Dynamic® is considered to be prudent and fiduciarily sound for institutional retirement plans, investment portfolios, UHNW family offices, and individual investors.
Enhanced Dynamic® is employed within two proprietary strategies that add significant benefit to domestic equity portfolios:
- Applied in a top-down manner to strategically establish over- and under-weightings of domestic, style, and cap size adherent equity managers and investment vehicles.
- Applied as a bottom-up manager screening and selection process used to evaluate and select proven, style adherent, active equity managers
Objectives of the Enhanced Dynamic® Investment Methodology
Outperforming Market Averages with Strategic Equity Allocation
In the domestic equity market, a growth or value equity investment style has been favored during certain periods of a market cycle versus the opposing equity style which has lasted for extended periods. The same statement holds true where a large cap or small cap equity investment style has been favored during certain periods of a market cycle versus the opposing equity capitalization size, which also has lasted for extended periods.
Investment style dominance has typically prevailed across all capitalization sizes, with the same holding true for investment capitalization dominance. Since 1978 versus the S&P 500, the Enhanced Dynamic® domestic equity investment methodology has achieved statistically significant annualized excess returns, adjusted for volatility, in back-tested and academic studies using the Wilshire large and small cap indexes.
Since 1978 versus the S&P 500, Enhanced Dynamic® has also demonstrated statistically significant annualized excess returns, adjusted for volatility, in back-tested, academic and industry studies using the Wilshire growth and value indexes. In fact, since 1978, as shown through every empirical academic study and our internal back-tests, the Enhanced Dynamic® methodology has consistently delivered higher risk-adjusted results through all investment cycles with indexes, and these results increased considerably when utilizing independent, active, style adherent, domestic equity managers. We expect to increase a portfolio’s overall domestic equity returns, with equal or lower volatility than the market, by combining the results of thoroughly screened and vetted active equity style and cap size management, applied strategically (not tactically) over a full market cycle.
The Enhanced Dynamic® investment methodology may be incorporated within existing domestic equity portfolios with minimal dislocation of current style adherent portfolio managers and investment structures, and without significant additional expenses.
The depth or degree of style and cap size adherence of the investment management vehicles will be an important determinant in the success and benefit of the Enhanced Dynamic® methodology within a client portfolio.
Again, we stress that equity portfolios are expected to remain fully invested at all times and that this is not a tactical market timing strategy.