To be clear, in a bull market, ROAR 10 will not keep pace with the S&P 500 (orange line below). It is not built for that. But this chart indicates its potential to bridge the gap between 60/40 and the SPY.
This busy set of numbers shows trailing and annual returns of ROAR 10 (black), AOR and SPY. This highlights the other risk management benefit of ROAR 10. On the right side, we see that in 2022, when the case for 60/40 truly blew up in investors’ faces, as stocks and bonds fell together, ROAR 10 stayed within shouting distance of where it ended 2021.
The ABCs of ROAR 10
This last graphic makes a simple point. ROAR 10 has produced significant Alpha with very low Beta compared to both AOR and SPY.
What does that mean? Alpha, simply put, answers the question “if the market gave me nothing, zero return, could I still make a profit?” And Beta explains how much of the market’s volatility a strategy took on in order to try to earn that Alpha.
So if we consider 60/40 (AOR) to be “the market” (stocks and bonds combined to be the market) which ROAR 10 is compared to, ROAR 10 theoretically produced 5% annual return in a flat market for AOR. And did so with less than half (48%) of the volatility.
With SPY as the market (so stock market, excluding bond market), ROAR 10 still managed to produce 3.6% positive return, and with less than 1/3 (30%) the volatility.
This is why I am always skeptical of “traditional” strategies. In my experience, they work well…until they don’t. When some market phase comes along and disrupts the “usual” approaches. That’s why I’m always looking to push the boundaries of what’s available to DIY investors. By creating models built for flexibility.
Thus the name ROAR Flex. It is not a strategy most people know. And likely, most will never discover what we built here. But for those who do, we think we’ve created the basis for very successful investment outcomes in the years ahead.
(To inquire about the ROAR Flex model portfolio and how to access it, email us at info@SungardenInvestment.com)
Important Regulatory Disclosure
This post is published by Sungarden Investment Publishing. Rob Isbitts is a publisher of financial research and model portfolios, operating under the SEC Publisher’s Exemption. He is not currently a registered investment advisor and does not provide personalized, 1-on-1 investment advice.
All information, signals, and model portfolios are provided for educational and informational purposes only. Subscribers are solely responsible for executing their own trades in their self-directed brokerage accounts. Past performance is no guarantee of future results. Drawdown caps and return objectives are strategic goals, not guarantees against loss of principal.