Thursday, July 2, 2015

IOM Performance Evaluation - June 2015

In an environment when Greek is teetering on the brink of bankruptcy and economic uncertainty is roiling the market, IOM portfolio has outperformed the market with over two percent in merely 4 months (since March 2015).

This outperformance is especially significant because it came at a time when the global markets were very uncertain. Following chart shows the market performance since March 2015.

The investment optimization model (IOM) has been developed to manage risk and amplify gains. In order to do so, the model needs to out-perform its benchmark in following three distinct environments: :

1- A market which is trending up
2- A market which goes sideways and down
3- A Bear market

In an up-trending market, the model's components will outperform its benchmark along with strict risk management process to ensure that if a single entity is doing bad, it is replaced. For example, last month Chipotle was removed and this month LinkedIn was removed from the portfolio.

Secondly, in a sideways market, like right now, the model is designed to outperform and preserve capital.

Finally, in a bear market, model will not only preserve capital using proprietary risk-management strategies, it will also short the market and diversify in other asset classes.

Therefore, the model is very holistic and so far in 2015, it has proved to be very valuable. Moving forward, we are working on enhancing the model with additional business rules to not only amplify portfolio's return potential but also to forewarn about an impending bear market. We will keep the blog updated with latest performance and enhancements.