BOSTON, Aug. 27, 2019 /PRNewswire/ -- W.E. Donoghue & Co., LLC today announced a change to the methodology for the W.E. Donoghue Power Dividend Index with the inclusion of an additional economic factor that will be used in conjunction with the existing technical signals to trigger moves to a defensive position.
The additional economic factor will trigger 50% of the Index to move to a defensive position, while the other 50% will continue to be determined by the existing rules, that are based on exponential moving averages.
The new economic factor follows the Nonfinancial Leverage Subindex of the Federal Reserve Bank of Chicago's (Chicago Fed) National Financial Conditions Index (NFCI). The Nonfinancial Leverage Subindex consists of debt and equity measures, in which positive values have been historically associated with tighter–than–average financial conditions, while negative values have indicated the opposite.
According to the Chicago Fed's research, the Nonfinancial Leverage Subindex can serve as an early warning signal for financial stress and its potential impact on economic growth. The Leverage subindex is the most cyclical of the three subindexes in the NFCI, often leading the others into and out of a financial crisis.
Each of the defensive triggers in the Power Dividend Index will operate independently when triggering a move from equities to a defensive posture. When only 50% of the Index is defensive, the move back into equities will be determined when the trigger that moved it defensive turns positive based on the Index rules. If 100% of the Index is defensive, when the first of the two triggers signal a move back into equities, the Index will move 100% back into equities at that time.
"Similar to the addition of the Quality factor, we are looking to add enhancements to the Power Dividend Index. While we still have a positive outlook, we want to better prepare for the potential of the markets move from bullish to more bearish territory," said Jeff Thompson, Chief Executive Officer of W.E. Donoghue.
Additionally, a rule change has been implemented in regard to the timing of the re-entry into equities for the Power Dividend Index, Power Dividend Mid-Cap Index, and Power Dividend International Index. After the close of trading on the day the indexes' primary and confirmation signal occur, the indexes will allocate back into equities at the market open after one trading day.
More information about the indexes can be found at www.donoghue.com.
About W.E. Donoghue & Co., LLC
W.E. Donoghue & Co., LLC ("W.E. Donoghue") is a tactical investment firm that has specialized in active risk-managed portfolios since 1986. In December 2017, W.E. Donoghue acquired JAForlines Global, an investment management company that specialized in risk-managed global tactical strategies. The combined firm has approximately $2.3 billion in assets under management and advisement in mutual fund, VIT, and separately managed account assets as of June 30, 2019.
W.E. Donoghue offers its strategies through its rules-based Power product series and their JAForlines Global Tactical Allocation Portfolios. The W.E. Donoghue Power line of strategies utilizes technical indicators to recognize shifts in market momentum and leverages proprietary tactical signals within custom indexes to preserve capital in down trending markets and seeks to offer a stronger client-centric risk-adjusted return stream over a full market cycle. The JAForlines Global Tactical Allocation strategies employ fundamental research with a top-down macro global orientation and are designed to lower volatility while striving to produce long-term capital appreciation.
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W.E. Donoghue & Co., LLC
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