Program Summary:
The Flexible Global Growth strategy provides total flexibility in terms of portfolio allocations to regions, countries, sectors, and even asset classes via the use of ETF’s (Exchange Traded Funds). Thus, there are no predetermined style boxes to conform to, nor geographic or sector guidelines. In marketing terms, this is a “goes anywhere” portfolio designed to pursue growth opportunities in a wide variety of markets and asset categories.

The portfolio consists entirely of Exchange Traded Funds with the overall objective being to “own the best and ignore the rest” of the universe of ETF's. The Flexible Growth portfolio will strive to own the top tier ETF’s (approximately 25 positions) based on our performance rating system.

Management Strategy:
One constant in investing is leadership is always on the move. Thus, it is vital to employ a system that has the potential to adapt to ever-changing environments. For example, it is common knowledge that whatever was hot last year is often this year's dog.

However, it is important to recognize that we do not utilize the typical “buy what worked best last week” type of approach. Our momentum formulas utilize a longer-term approach (126-day rate of change with a 22-day exponential moving average applied to smooth out the movements), and are designed to create positions that can be held for 3-6 months at a time.

We utilize a momentum-based strategy due to the long-term reliability of the approach. According to Ned Davis Research, price momentum has been rigorously tested in the academic community. The independent work of Chan, Lakonishok, and Jegadeesh (The Probability of Momentum Strategies – Financial Analysts Journal November-December: 80-90), Moskowitz & Grinblatt (Do Industries Explain Momentum? Journal of Finance, Vol LIV, no 4 August), and others attest to the validity of the price momentum variable.

The Flexible Global Model also incorporates risk management strategies which allow HCM to, at the manager's discretion, increase money market and/or cash positions during weak and/or high risk market environments.

How Does the “Go Anywhere” Strategy Work?
Each week, every ETF in our universe (which excludes inverse indices and leveraged indices) is ranked, by our internal performance systems in terms of relative strength and momentum. We then create a list of the top 20%. From this list of the top ETFs, we then review each for liquidity and technical health.

It is important to note that while the rankings of the ETF’s are done by computer, the final allocation decision rests with the manager who will take risk factors and current market conditions/themes into account when creating the portfolio. Thus, this is not a “black box” approach to investing.

Over long periods of time (we’re talking about years, not weeks or months); a momentum-based system has the potential to automatically adjust to leadership trends. Unlike valuation, fundamental, or economic variables, price is unique in that it cannot diverge from itself. Thus, in theory, a momentum approach can lock onto major leadership trends, thus allowing profits to run and losses to be cut relatively short.