Turner Capital Portfolio Strategies
Turner Capital has multiple investment strategies (see brief overviews below). Clients can, depending on the total amount of their investment and risk profile, follow one or more of these strategies in a managed account structure.
The required total combined minimum account size is $100,000. The minimum account size per portfolio strategy is $50,000.
We use a "Managed Account" structure where every client maintains 100% control of their capital at all times. Capital is never commingled with other accounts that do not belong to the client. Turner Capital is ONLY permitted to make trading decisions in client accounts and to deduct pre-authorized management fees. Clients can terminate Turner Capital's management of their accounts at any time with a simple phone call to either Turner Capital or the brokerage firm where the client accounts are custodied.
Funds are custodied at TD Ameritrade.
MANAGEMENT FEES (We aggregate family accounts to determine the total account size for Fee setting):
2.0% for aggregated accounts that are less than $250,000.
1.5% for aggregated accounts that are from $250,000 to $1,000,000.
1.25% for aggregated accounts that are from $1,000,000 to $3,000,000
1.0% for aggregated accounts that are $3,000,000 and above
TRADE TRANSACTION FEES: NONE
OBJECTIVE: In bull market trends, hold fundamentally strong, up-trending stocks; go to cash in the market Transition Zone*; and, in bear market cycles, up to 100% of capital into the inverse ETFs of the S&P 500, Nasdaq, DJIA and the Russell 2000.
Management Approach - This is a conservative investment strategy that focuses on fundamentally strong, up-trending, stocks in bull markets; raises cash in neutral or transition markets; and, invests up to 100% of capital in inverse ETFs in bear markets. 20 maximum holdings with an equal distribution of capital per holding. No more than 30% in any one Sector and no more than 20% in any one Industry in bullish markets in bullish markets.
OBJECTIVE: Match the return of the SSO (a 2x S&P 500 ETF) in bullish cycles; move to cash in transition cycles; and, match the return of the SDS (a 2x S&P 500 inverse ETF) in bearish cycles.
Management Approach - Hold 100% of capital in the SSO when the market is bullish and above the SSO Transition Zone and trending higher; remain 100% in cash when the SSO and the SDS are inside their Transition Zones; and, hold 100% of capital in the SDS when the market is bearish and above the SDS Transition Zone.
DIVERSIFIED INCOME STRATEGY: (Start Date: 11/2019)
OBJECTIVE: Generate up to 9% +/- annual income from dividend-paying ETFs, CEFs (Closed End Funds), stocks and covered call trades.
Management Approach - Hold a diversified mixture of ETFs, CEFs and/or stocks that exhibit a consistent to growing dividend yield from 4% to well over 10%, depending on the equity. The goal is income and NOT growth. Generally, 20% of the portfolio will be invested in short-term covered call trades. Each holding is monitored regarding 'normal' price volatility. The goal is to stay invested in the equity until receiving the dividend payout as long as the holding does not move lower than its 'normal' price volatility range. Income is used to purchase more shares of the same holding that generated the income. If no high-yielding equity meets the minimum requirement to be in the portfolio strategy, the strategy will focus on the highest-yielding safe money market funds available at the time.
TOTAL MARKET STRATEGY: (Start Date: 01/2018)
OBJECTIVE: Match the performance of the US stock market (via an equal-weighted investment strategy in the S&P 500, the Nasdaq, the Dow Jones Industrial Average and the Russell 2000) in bull cycles; go to cash in transition cycles; and, invest in the inverse of the same indexes in bear cycles.
MANAGEMENT APPROACH - Goal of 25% invested, each, in the SPY (S&P 500 index ETF), QQQ (Nasdaq index ETF), DIA (Dow Jones Industrial Average index ETF) and IWM (Russell 2000 index ETF) in bull trending markets. In transition markets, the model tends to hold cash in money markets. In bear trending markets, the model invests in the inverse ETFs of these same four indexes.
* Turner Transition Zone
The key to knowing when to have a bullish, bearish or go-to-cash investment bias hinges, in our opinion, on measuring the current trend of the market. Having the correct investment bias is crucial to improving the odds of making better, more profitable, trading decisions.
Management Approach - We consider having the correct or best investment bias (mindset) is an important part of the battle when determining whether to be a buyer equities, holding cash, a buyer of short position equities such as inverse ETFs, and certainly, when to sell. The key for our investment strategy is knowing when the market (as defined by the Turner Total Market Index) has moved from a bullish trend to a bearish trend and vice versa. This is done by measuring the current trend and mathematically determining whether the direction of the market's trend. One of the tenants of our Market-Directional investment methodology is the assumption that the current market trend will continue until it doesn't; so, it behooves us to be vigilant in the measurement of the current market trend to see if it has stopped trending in its previous manner and has reversed course. Certain key assumptions are made in this quantitative analysis; one of which is the "Turner Transition Band".
We believe that the best time to have capital exposed to the market, is when the risk of the market changing directions is relatively low; as in the case of longer-trend bull market cycles and longer-trend bear market cycles. When the market is not in a longer-trend, as in the case when the market is inside the Turner Transition Band, we believe risk of loss of capital is elevated and the tendency of whip-saws (moving in and out of the market). We look for opportunities to be invested in the market in both bull and bear cycles, but move to cash when the market is in the higher risk, Turner Band.
Turner Capital has developed a proprietary market index called, "The Turner Total Market Index". This index is a composite of the S&P 500, the Nasdaq, the Russell 2000 and the DJIA. The Turner Transition Band is a volatility band, the width of which is one standard deviation of normal volatility of the Turner Total Market Index, on either side of a 200-day moving average of the Turner Total Market Index. The investment bias (whether to be bullish, neutral or bearish) is predicated on where the weekending close of the Turner Total Market Index is located in relation to the Turner Band. The investment bias is bullish if the Total Market Index is above the Turner Band and trending higher; neutral if the Total Market Index is inside the Turner Transition Band; and, bearish if the Total Market Index is below the Turner Transition Band.
** PAST PERFORMANCE IS NOT ALWAYS INDICATIVE OF FUTURE RETURNS. YOU SHOULD NOT BASE YOUR DECISION TO FOLLOW ANY TURNER CAPITAL PORTFOLIO STRATEGY BASED ONLY ON HISTORICAL RETURNS. YOU CAN LOSE CAPITAL FOLLOWING THIS OR ANY INVESTMENT STRATEGY THAT RELIES ON THE STOCK MARKET FOR POTENTIAL GAIN. PERFORMANCE NUMBERS ASSUME NO COST FOR TRADING AND DO NOT INCLUDE THE COST OF MANAGEMENT FEES, WHICH VARY, DEPENDING ON THE TOTAL AMOUNT UNDER MANAGEMENT OF CLIENT.
IMPORTANT: THE PERFORMANCE-RELATED INFORMATION PROVIDED HEREIN IS NOT REPRESENTATIVE OF PERFORMANCE IN ANY CLIENT ACCOUNT DUE TO VARIOUS FACTORS SUCH AS WHEN THE CLIENT ACCOUNT WAS OPENED, THE FEE CHARGED, AND ANY CLIENT RESTRICTIONS.