New Covestor model managers System Research LLC began its business in 2008 by selling market timing research to investment advisory firms. Now offering portfolio managing services, System Research has their own approach to investing. According to the company’s website:
System Research believes that actively traded quantitative investment models can provide a viable alternative and in many cases complement traditional buy-and-hold and asset allocation portfolios.
In its Interest Rates and Currencies model with Covestor, System Research brings an active trading strategy to work with a portfolio of ETFs and large cap stocks with exposure to interest rates and currencies. The top holding currently in the model is ProShares UltraShort Euro (EUO), a exchange traded fund that attempts to deliver results equal to 200 percent of the inverse of the U.S. dollar price against the Euro. The Euro could see some major movement in 2011—movement that will depend on the state of the Eurozone debt issues.
Here’s how System Research describes its overarching strategy and research for the new model:
The strategy aims to capture movements in interest rates and currencies by buying long and inverse Fixed Income and Currency ETFs. The models are extensively researched/tested and aim to capture robust and repeatable responses of the asset classes. The portfolio consists of ETFs that provide long and inverse exposure to Fixed Income and long and inverse exposure to the US Dollar. The models are run daily and use raw data imported from data vendor CSI.
There is a lot of debate over whether active trading is a better idea than buy and hold, and many factors should be considered before choosing one strategy over the other. These include (but aren’t limited to) risk, taxes, commission charges, and the difficulty of market timing.
If you’re interested in investing in this sector, be sure to check out the Interest Rates and Currencies model on Covestor.
