The Hedged Equity model on Covestor is managed by Swan Asset Management. The model works to provide steady performance with income bonds while providing for some growth through the addition of equities. As equities enter the picture, the bonds serve a dual purpose, as they also provide a hedge against a volatile market and the risks equities expose the model to.
The top position in the model is ProShares UltraPro Short S&P 500 ProShares (SPXU), an ETF that investors with a bearish view of the S&P 500 may consider utilizing. SPXU attempts to perform at 300 percent of the inverse of the S&P 500. The majority of the fund’s assets are invested in S&P 500 swaps and other derivatives, although some assets may be invested in money markets. As of the date of this post it was trading at a discount to NAV.
The next largest holding in the model is Johnson & Johnson (NYSE: JNJ). JNJ has a dividend yield of 3.67 percent (as of September 8th, 2010) and a middle of the road price to earnings ratio compared to competitors. Their quarter two 2010 sales increased by .6 percent from the previous year as did their net earnings and earnings per share.
Another top position in the Hedged Equity model is Monsanto Co (NYSE: MON), a seller of crop protection chemicals, seeds and other agriculture supplies. The company has a relatively high price to earnings ratio, although not compared to some of its competitors. As of September 8th, 2010, MON had a 2.01 percent dividend yield. Their quarter three 2010 earnings per share met analysts’ expectations as did their third quarter sales. Unfortunately, their quarter three net sales and gross profit were lower than they’d been during the same period of 2009.
