What is Mosaic ?
ETF Mosaic Solutions was designed as a response to the ongoing dilemma that many investors face when trying to balance the risks of portfolio value loss against the desire to achieve a steady and reliable income stream from their capital. Mosaic tackles the risk/income problem with a momentum based analytical platform focused on a collection of portfolios based on equities, bonds, commodities, countries, sectors, etc The platform re-examines the relative strength of portfolio components on a daily basis and commits capital to the highest ranked components only. The model portfolios may or may not trade weekly, or more frequently for risk management purposes, depending on the daily rankings of each portfolio component.
All Mosaic models trade Long only and enable investors to choose their own comfort level with risk exposure by providing visual chart overlays of several technical stops, including polynomials and equity curve tracking that may argue for cash positioning. While this retreat to cash approach may sometimes produce lost "opportunity costs" to short term market surges, the over-riding goal of Mosaic is to minimize risk exposure, not maximize net returns.
All Mosaic models trade Long only and enable investors to choose their own comfort level with risk exposure by providing visual chart overlays of several technical stops, including polynomials and equity curve tracking that may argue for cash positioning. While this retreat to cash approach may sometimes produce lost "opportunity costs" to short term market surges, the over-riding goal of Mosaic is to minimize risk exposure, not maximize net returns.
How Mosaic Works
The premise of Mosaic modelling is that market momentum engineering can significantly reduce risk and volatility exposure, thereby straightening the equity curve of an investment portfolio and avoiding the uncertainty associated with timing directional market moves. While the potential yields of such an approach are somewhat capped by the limits of playing divergent sectors against one another, the strategy offers maximum protection of assets from news driven events as well as micro and macro economic surprises that typically produce situations of extreme market volatility. . .and risk.
Mosaic is a hybrid application of Tactical Asset Allocation (TAA), an asset management approach widely used by money managers that periodically rotates capital into market sectors that are exhibiting relatively superior performance. What sets Mosaic apart from other TAA models is the use of momentum driven rotational modelling that helps to deliver a consistent revenue stream without the need to make wild adjustments in position sizing and portfolio components.
Mosaic is a hybrid application of Tactical Asset Allocation (TAA), an asset management approach widely used by money managers that periodically rotates capital into market sectors that are exhibiting relatively superior performance. What sets Mosaic apart from other TAA models is the use of momentum driven rotational modelling that helps to deliver a consistent revenue stream without the need to make wild adjustments in position sizing and portfolio components.
Controlling Volatility
Mosaic is not a directional system and does not attempt to forecast timing cycles in either individual securities or the broader markets. Mosaic does use risk metrics to identify collapsing or expanding volatility cycles and to use those situations of low risk to increase capital exposure within the models. However, Mosaic is not designed to predict when those investment situations will occur. Within the dynamics of the Mosaic model flux certain situations periodically develop where sector divergence exceeds normal thresholds. The path of of these opportunistic investment sweet spots is tracked graphically within Mosaic so periods offering the highest odds for infusions of new capital are easier to identify and capture.
Most Mosaic models trade a portfolio of highly liquid sector ETFs. All trade signals are tracked and re-calibrated over a floating 500 day look back period to assure that the portfolio models are maintaining maximum long-term robustness.
From a trade management standpoint the average frequency of position realignment is typically monthly although the actively managed models may trade weekly or more frequently, going to the safety of cash during periods of extreme volatility and momentum reversals in order to avoid equity loss. Equity curve maintenance and money management controls are embedded in the models to further assure minimal capital draw-downs.
The objective of all the Mosaic models is achievement of average annual gains exceeding 10% with a higher reward to risk ratio as compared to broader market indices such as the S&P 500 (SPY), in most investment environments. Low draw down, low portfolio turnover and a superior equity curve linearity define Mosaic's core attributes. Mosaic's hybrid format is particularly appropriate for crafting self managed IRAs and other retirements portfolios since funds are typically not withdrawn from the account on a short term basis, but rather incrementally increased with the goal of building long term net worth.
Most Mosaic models trade a portfolio of highly liquid sector ETFs. All trade signals are tracked and re-calibrated over a floating 500 day look back period to assure that the portfolio models are maintaining maximum long-term robustness.
From a trade management standpoint the average frequency of position realignment is typically monthly although the actively managed models may trade weekly or more frequently, going to the safety of cash during periods of extreme volatility and momentum reversals in order to avoid equity loss. Equity curve maintenance and money management controls are embedded in the models to further assure minimal capital draw-downs.
The objective of all the Mosaic models is achievement of average annual gains exceeding 10% with a higher reward to risk ratio as compared to broader market indices such as the S&P 500 (SPY), in most investment environments. Low draw down, low portfolio turnover and a superior equity curve linearity define Mosaic's core attributes. Mosaic's hybrid format is particularly appropriate for crafting self managed IRAs and other retirements portfolios since funds are typically not withdrawn from the account on a short term basis, but rather incrementally increased with the goal of building long term net worth.
Shorter Term Situations
Mosaic utilizes a toolbox of proprietary forensic software to identify high-probability trading situations among the various components in each Mosaic portfolio model. The Situations dashboard is one such tool that analyzes the risk exposure, relative strength, momentum and equity curve stability of a sample portfolio according to Mosaic's performance goals.
Situations are particularly useful in identifying impending short term changes in market sector performance so that longer term portfolio positions can be effectively hedged or a "risk on", "risk off" asset insurance program can be applied.
The Situations toolbox of indicators, including the RSQ, P3 and P6, are also useful in quantifying the precise risk profile of each Mosaic model component and help to assure that component's ongoing contribution to a portfolio's equity curve linearity.
Situations are particularly useful in identifying impending short term changes in market sector performance so that longer term portfolio positions can be effectively hedged or a "risk on", "risk off" asset insurance program can be applied.
The Situations toolbox of indicators, including the RSQ, P3 and P6, are also useful in quantifying the precise risk profile of each Mosaic model component and help to assure that component's ongoing contribution to a portfolio's equity curve linearity.
