How to Use the Model Fund Portfolio

How to Use the InvesTech Research Model Fund Portfolio

The InvesTech Model Portfolio is designed for individual investors who want to follow our allocation and sector recommendations for the equity/fund portion of their portfolio. The following information will assist you in getting started with InvesTech. It involves the decisions that must be made by an investor who wishes to bring their portfolio allocation more into alignment with InvesTech’s strategy:

Determine your invested allocation

Determine your current invested allocation by totaling the amounts you have invested in equities (individual stocks, stock mutual funds, ETFs, and international stocks/funds). Divide this by your total equity portfolio size. This is your percent invested allocation.

Refer to the InvesTech invested recommendation and allocations

Refer to the InvesTech “percent” invested recommendation and allocations listed in the Model Fund Portfolio. If you are holding a portfolio that is similar in composition, sector weighting, and percent invested allocation to what we are currently recommending in the Model Fund Portfolio, it is unnecessary to make any changes at this time. Just wait for InvesTech’s next recommendation, announced to the Model Fund Portfolio, to either add new positions or take profits… and act accordingly with your own holdings.

Adjust your portfolio

Adjust your portfolio, if necessary. Purchases after our initial recommendations must be made at your discretion; however, if your portfolio mix is dramatically different from our current recommendations and sector weightings, you may wish to consider changes to more closely align your portfolio with our model. For example, check your mutual funds for their weightings in each sector. If the combination of your stocks, ETFs, and mutual funds give your portfolio significantly more or less exposure to a particular sector or category (such as international or small-cap) than we recommend, then you may wish to adjust your holdings to bring them more in line with our recommendations.

An exception to the above would be if we warn in the InvesTech Research newsletter or on our Model Fund Portfolio page against new purchases in a particular area. This usually means that we believe sector leadership is changing or most of the profits on a position have already been achieved and new investment would not be advisable. In that case, it is better to wait in the safety of a money market fund for our next recommendation. Depending on market conditions, we may advise bringing your portfolio in line with our recommendations by phasing into the market. Please review the Model Fund Portfolio published in the current newsletter or the “New Subscribers and Our Portfolio” section of the Model Fund Portfolio page for more information.

Strategy

Remember, InvesTech’s strategy is not a short-term market timing system, but a long-term “risk allocation” strategy based on highly sophisticated indicators. Our objective is NOT to try to forecast stock movements in advance, but to correctly assess the market environment. When market indicators point to a strong, low-risk buying opportunity, we will recommend an aggressively invested position and growth oriented sectors. Conversely, we will inform you when our indicators show risk has risen to an unacceptable level so that you can take steps to protect your portfolio. This risk-averse strategy will help you to preserve capital in times of market vulnerability so that you will be ready and able to take advantage of the next low-risk buying opportunity when it arrives.