Products January 25, 2011

Forward Management Unveils Tactical Fund

Forward Management launched the Forward Tactical Enhanced Fund (FTEEX) that seeks profit through continuous management of market exposure.
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The Tactical Enhanced Fund uses the same base strategy employed by the Tactical Growth Fund, but is tailored to investors with higher-than-average absolute return targets and tolerance for risk and volatility.  The Enhanced strategy differs by using somewhat greater leverage; up to 200% net long or 100% net short.  It also allows for more opportunistic trading around the portfolio’s core holdings to take advantage of shorter-term market movements, which can lead to benefits from higher market volatility and  maximize potential profit when the market remains within a tight trading range.

According to the announcement, the fund’s investment strategy is designed to evaluate potential long and short investments in an attempt to isolate securities that the manager believes are undervalued or overvalued relative to their intrinsic value and offer the greatest risk-adjusted potential for returns. The manager will rely on a variety of factors to determine whether the market itself, or a particular sector or industry, is undervalued or overvalued including valuation and monetary conditions, investor sentiment, and momentum factors.

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The investment process blends top down, fundamental analysis of macroeconomic factors and investor sentiment with quantitative model-driven analysis of market momentum.  Based on its assessment of market signals, the team invests the portfolio long, short, or neutral to the market.  The strategy invests in both U.S. and non-U.S. securities primarily through futures and exchange traded funds (ETFs) to provide equity market exposure while attempting to avoid stock selection risk. The investment objective of both funds is to produce above-average, risk-adjusted returns, in any market environment, while exhibiting less downside volatility than the S&P 500 Index.

Both the Tactical Enhanced Fund and the Tactical Growth Fund are subadvised by Broadmark Asset Management, LLC. The Tactical Enhanced Fund is offered in investor, institutional, A and C share classes and is available through Charles Schwab, National Financial, Pershing and Matrix Clearing, the announcement said.

Data & Research January 25, 2011

Investor Confidence Falls in January

The State Street Investor Confidence Index shows investor confidence fell 3.3 points globally from December to January.
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Globally, confidence levels fell from 104.2 in December to 100.9 in January, with declines evident across all regions. The risk appetite of North American institutional investors fell to 99.5, a 3.6 point decline from the December level of 103.1, State Street reports. Similarly in Europe, institutional investor confidence decreased 3.9 points to 93.5 from December’s revised level of 97.4.   

The decline in confidence among Asian investors was somewhat more pronounced, resulting in a decline of 5.4 points in the confidence measure in that region, from 102.9 to 97.5.   

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Developed by Harvard University professor Kenneth Froot and Paul O’Connell of State Street Associates, the State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher is risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their allocations to risky assets.  

“Institutional investors reverted to a more cautious stance this month, balancing improved prospects for global growth against what has been a relatively rapid run-up in prices,” said Froot, in the press release. “With world equity prices up 6.9% over three months and 20% over six months, valuations have moved up a reasonable amount, prompting some in the institutional community to adopt a ‘wait-and-see’ stance. It remains to be seen whether improved macroeconomic data from the US and policy actions with respect to peripheral European debt will prompt an early reassessment of this stance.” 

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