AIM UK

[ls7550]

I should point out that over my entire accounts I am not currently loaded to 85% stock exposure levels, but closer to between 58% and 68% levels (depending against which baseline the measure is made e.g. 68% compared to current total value).

I run a rather unconventional AIM style, having stripped down AIM into three separate engines, buy-and-hold, stop-loss and volatility/cost-averaging capture.

I hold a diverse range of good quality large cap high yield stocks for the B&H element, use a time diversified stop-loss style that represents a managed futures style, and use a form of scaled up AIM volatility capture method that's like Don Carlson's EZM ladder (but without the initial UP leg) for volatility capture and downside cost-averaging purposes).

B&H remains as ever fully loaded. The stop-loss style is loaded to around 75% levels. The volatility capture component however has just recently moved to 0% loaded having sold out following recent stock price rises over the last couple of days.

Generally the stop-loss and volatility capture elements are heavily inversely correlated which helps both to reduce volatility across the whole whilst maximising utilisation of funds.

Primarily for me therefore cWave and vWave provide an indicator of how much downside (cash) is required to cover to the bottom of the volatility capture Ladder. The closer that bottom is the larger the amounts traded at each ladder rung (and the larger the potential volatility capture gain). Having a Ladder top that is very close to the price at the time of starting a new Ladder means that overall AIM's volatility capture trade sizes are magnified significantly.

I personally see these three distinctly different styles as being representative of style diversification, in the belief that such an approach is likely to remain less correlated with each other than that of class/sector diversification. From what I've seen as more ETF's are introduced that cover a vast range of classes that were previously unavailable to public investors, the more closely those classes appear to subsequently correlate with each other.