SAN DIEGO, Aug. 13, 2015 /PRNewswire/ -- Reality Shares Advisors, LLC an innovative investment advisor and index provider, today launched the Guardian Indicator™, a proprietary new market-strength indicator designed to identify long-term directional changes in the stock market. The Guardian Indicator's forecasting algorithm applies a unique combination of momentum and volatility gauges to the sectors of the S&P 500 to signal long-term market downturns and alert investors to decrease market exposure in order to mitigate the impact on their portfolios.
"Markets are subject to extended downturns driven by both fundamental and emotional factors, but Reality Shares' Guardian Indicator provides a quantitative signal to identify market trends and help to mitigate the impact of price declines," said Eric Ervin, President and CEO of Reality Shares Advisors. "The Guardian methodology uses a disciplined approach to help investors reduce volatility and risk in their portfolios, and has a wide range of applications for investors looking to navigate the noise and volatility of the markets."
Under the Guardian methodology, a negative indicator in either its momentum or volatility gauge is predictive of a declining market. To generate the most accurate forecast, the Guardian Indicator applies this methodology to each of the 10 sectors of the S&P 500 in order to measure the broad-based health of the market. When eight or more of the sectors are positive, the Guardian Indicator is positive and the overall market is predicted to rise. When three or more of the sectors turn negative, it signals a broad market decline.
The Guardian Indicator has been successful identifying major long-term market declines in backtested (simulated) results. Over the past 15 years, it correctly forecast both of the major bear markets in the U.S., signaling to reduce market exposure from Sept. 14, 1999 until May 21, 2003, during which time the S&P 500 Total Return Index fell 27.23 percent. It also signaled to exit the equity markets from Dec. 17, 2007 until July 8, 2009, when the S&P 500 fell 36.75 percent.
As a result, the Guardian Indicator has been shown to enhance returns and reduce volatility through a wide range of market conditions. In backtested results for the 20 years from 1995 through 2014, investing in the S&P 500 Total Return Index (SPXT) during positive Guardian Indicator signals and shifting assets to the Barclays US Aggregate Bond Index during negative signals would have generated average annual returns of 14.3 percent, about 40 percent greater than the 10.6 percent return for the S&P 500 alone. Over the same period, the Guardian Indicator strategy had 10.5 percent average annual volatility, nearly one-third less than the 15.1 percent volatility for the S&P 500.
For further information about the Guardian Indicator, including free interactive research tools with market and sector strength information, as well as research and methodology documents, visit www.RealitySharesAdvisors.com/Guardian.
About Reality Shares Advisors
Reality Shares Advisors is an investment advisor and index provider that creates innovative, research-driven solutions to help minimize the effects of market noise and emotion on investment performance. Our goal is to democratize the world's best investing ideas by delivering institutional-grade investment strategies and unique market exposure opportunities. Our strategies are designed to enhance a wide range of investment concepts using quantitative analytical methods focusing on investment characteristics such as diversification, lower correlation, risk mitigation, or highly targeted market exposures. For more information, visit www.realitysharesadvisors.com.
This material is prepared by Reality Shares Advisors, LLC ("Reality Shares") and all material or information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. There is no representation or warranty as to the accuracy of the information and Reality Shares shall have no liability for decisions based on such information.
Index performance returns are for illustrative purposes only and do not represent actual portfolio performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. The information herein is not intended to predict actual or future results, which may differ substantially from those reflected. Investing involves risks, including possible loss of principal. Performance data quoted here represents past performance. Past performance is not necessarily indicative of future results.
This document contains certain performance data based on back-testing, (i.e.) simulations of performance of a strategy as if it had actually existed during a defined period of time. The results of such data presented here are for illustrative purposes only, and constitute the judgment of Reality Shares Advisors. While the information has been prepared in good faith, there are inherent limitations that recipients must consider carefully. Different models or different assumptions may yield different results.
Other than disclosures relating to Reality Shares, the information and material contained in this publication has been obtained from sources that Reality Shares believes to be reliable, but Reality Shares does not represent or warrant that it is accurate or complete.
Reality Shares, Inc. keeps certain activities of its business units separate in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of Reality Shares, Inc. may have information that is not available to other business units. Reality Shares, Inc. has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. No representation is being made that any investment product will achieve performance similar to those shown.
There are risks associated with investing, including loss of principal. Past performance is not indicative of future performance and is no guide to future returns.
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