A.I.M. For Exchange Traded Funds

[ls7550]

Hi Cindy.

One option that you might like to consider is to drive volatility.

For example you might use the vWave stock/cash indicator to create your own virtual Index comprised of part DDM (2X Dow) and part conventional Dow (1X), with the vWaves stock element representing DDM exposure and the cash representing 1X Dow exposure. So if the current vWave was 79% stock, 21% cash the virtual index would be allocated 79% DDM and 21% DOW (for an overall equivalent of 179% stock exposure). Unitise the combination to produce a current (virtual) value, and update over time.

At your review date, first update the virtual index unit value and then apply AIM (part stock, part cash) to that in the normal manner (adding or reducing to/from real DDM/DOW holdings when AIM indicates a trade).

Its an additional layer to manage, but not that difficult, and I suspect you'll find the effort worthwhile.

I'm personally using something along this line for my speculative element (around 10% of my total fund value, against which I've estimated and target a 20% to 40% p.a. return), but in a more aggressive manner and on a day trading basis that primarily only targets volatility capture benefits alone (little/no regard to price appreciation capture benefits).

Best. Clive.