Virtus Investment Partners, which operates a multi-manager asset management business, has launched the Virtus Premium AlphaSector Fund, an extension of Virtus’ AlphaSector product suite which is sub-advised by F-Squared Investments.
Similar to the Virtus AlphaSector Allocation Fund and the AlphaSector Rotation Fund, introduced by Virtus in late 2009, the Virtus Premium AlphaSector Fund is constructed exclusively from the nine Select Sector SPDR exchange-traded funds plus a short-term Treasury ETF.
The principal distinction between the strategies is that the Premium AlphaSector Fund has the ability to reallocate weekly, rather than monthly.
"Financial advisers recognise that our AlphaSector strategies provide clients what they are looking for in a post-2008 investment era – the flexibility to allocate to cash in downward trending markets while remaining invested in upward trending markets," says Frank Waltman (pictured), Virtus’ executive vice president, product management.
"The Premium AlphaSector Fund offers advisers a way to better manage the impact of down markets which, in turn, increases the likelihood their clients can achieve their retirement or investment goals."
The fund’s weekly reallocation signals are generated by F-Squared’s proprietary quantitative model that identifies which sector(s) may weigh down future performance. Those sectors are then omitted from the portfolio and the assets are allocated equally to the remaining sectors. When three or fewer sectors are represented, the portfolio will begin building a position in cash equivalents, up to 100 per cent of the portfolio.
"The introduction of the Virtus AlphaSector Funds last year proved the power and importance of a strategy that is designed to avoid significant losses, yet is still able to participate and even outperform when the market is heading up," says F-Squared’s president and chief executive officer Howard Present. "With the launch of the Premium AlphaSector Fund, we are able to offer financial advisers a more dynamic approach to managing market volatility with the objective of outperforming the S&P 500."