Introduction

During Bull markets, the EZ-RO Defensive Sector Rotation Index selects a portfolio of eight ETFs comprising the top Momentum Leaders of each of its eight underlying strategies: SPDR-Sectors, iShares-Sectors, Vanguard-Sectors, Dissimilar-Sectors, SPDR-Subsectors, iShares-Subsectors, AI Champions, and Global Prudence. During faltering Bull markets, the Index further considers the momentum of a Defensive Backstop strategy intended to provide a performance floor for the Momentum Leader selection process. During Bear markets, as determined by StormGuard-Armor, the Index employs a Bear Market Strategy that seeks to avoid risk and secure a positive return by selecting top Momentum Leaders from among a selection of bond, treasury, gold, and other defensive ETFs.

Signal Processing Changes the Game

Momentum Leaders

The objective during a Bull Market is to own a set of momentum leaders, so the operative question is “which of the many methods of measuring momentum is optimum?” Our video entitled “Which Trend is My Friend?” answers that question in general and in detail, and the answer is not even close to the financial industry’s 12-month simple moving average momentum factor.

Of course, the optimum method, stated simply is "the one that best predicts next month’s top performers." When further considering different market temperaments and asset classes, the solution requires some serious signal processing expertise – our forte. Our algorithmic technology, Temporal Portfolio Theory, employs the cross-disciplinary sciences of Matched Filter Theory and Differential Signal Processing – the very same technologies that enable WiFi, USB, iPhones, digital TV, to perform so well. AI Fuzzy Logic and AI Feedback Loops further improve the model's defensive and adaptive performance.

Risk Avoidance?

According to MPT, risk is a simple one-dimensional problem cured by a single dose of diversification. However, our research shows that the most proficient way to reduce risk is through “risk avoidance” – specifically, avoidance of momentum laggards and avoidance of bear markets. We employ a fairly sophisticated Bull-Bear indicator, StormGuard, which is designed to determine whether to identify momentum leaders from (1) a set of bullish equities or (2) a set of defensive bonds, treasuries, or commodities. In 1952, Modern Portfolio Theory (MPT) led to a portfolio design strategy of diluting equity risk with a strong bond position, which is the basis for today's popular 60/40 portfolio. Unfortunately, the reduced risk comes with a cost of a substantially reduced return. A better solution is employ modern signal processing methods to know when to hold bullish equities and know when to "avoid bear market risk" and own a set of defensive momentum leaders.

Max Tax Efficiency

There are two ways to achieve maximum tax efficiency when trading this Index:

(1.) Trade the Index within an IRA account using either SectorSurfer or AlphaDroid.

(2.) Buy an ETF that tracks this Index. Even though the Index generates short-term tactical trades, the ETF structure improves tax efficiency by designating ETF internal trades as non-taxable exchange-in-kind events.

Thus, ETF wrappers provide both IRA-like tax deferral and compounding of the full deferred amount, even within an ordinary taxable account. If held over 1 year, long term capital gains tax rates apply.

This is one of the best tax reduction solutions for HNW (high net worth) and RMD (required minimum distribution) funds in NQ (taxable) accounts.

View Essential Videos

Sector Rotation Competitive Landscape

Chart comparing best ETF momentum factor and sector strategy portfolios -- EZRO SPMO MMTM MTUM PTLC

The EZ-RO Index Speaks for Itself

The primary problem with the performance of most momentum funds in the industry is its fixation on employing the antiquated "momentum factor" noise filter, which is typically defined as the 12-mo. simple moving average of the returns. It is both far from optimum in its simplistic shape and fails to adapt to the character of the funds or the mood of the market. Please see the video "Which Trend is My Friend" to learn more about this topic.

IRA-Like Tax Deferral in Any Account

Illustration chart comparing tax efficiency of momentum strategies in taxable accounts in IRA or ETF

Get LTCG Tax Rates in a Taxable Account

EZ-Indexes often make short-term momentum and defensive trades seeking to own leaders and avoid laggards. While tax-deferred IRA and 401(k) accounts have changed the game for active traders, NQ (taxable) accounts can also provide tax-deferred growth by employing ETF exchange-in-kind principles! The chart and spreadsheet illustrate how it’s better to actively trade an Index like EZ-MO (with or without exchange-in-kind tax benefits) than it is to annually (and belatedly) trade an average basket of stocks.

Setting Better Short-Term Expectations

Investment Understanding Confirmation

The purpose of this document is to help everyone better understand that the shorter term character of this portfolio is naturally quite different from its longer term averages. Patience is a good thing! Although momentum is not always reliable in the short term due to ever-evolving world events, over the long term it is still the most reliable performer. This document opens as a web page and may optionally be converted to a PDF for your records or sharing with others.

Get Expectations Document

Introduction

Eight Underlying Strategies

ETF Design Paradigm Shift

Signal Processing Changes the Game

Momentum Leaders

Max Tax Efficiency

Sector Rotation Competitive Landscape

The EZ-RO Index Speaks for Itself

IRA-Like Tax Deferral in Any Account

Get LTCG Tax Rates in a Taxable Account

Setting Better Short-Term Expectations

Investment Understanding Confirmation

PDF Downloads

Index Summary

Index Methodology

Index Methodology

Index Methodology

Index Methodology

Index Methodology

A Few Ways to Invest

Import EZ-RO to AlphaDroid

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Have Questions? Get Answers!

SumGrowth Indexes

Introduction

Eight Underlying Strategies

ETF Design Paradigm Shift

Signal Processing Changes the Game

Momentum Leaders

Max Tax Efficiency

Sector Rotation Competitive Landscape

The EZ-RO Index Speaks for Itself

IRA-Like Tax Deferral in Any Account

Get LTCG Tax Rates in a Taxable Account

Setting Better Short-Term Expectations

Investment Understanding Confirmation

PDF Downloads

Index Summary

Index Methodology

Index Methodology

Index Methodology

Index Methodology

Index Methodology

A Few Ways to Invest

Import EZ-RO to AlphaDroid

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Import EZ-RO to SectorSurfer

Have Questions? Get Answers!

SumGrowth Indexes

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