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Tactical Large Cap Equity

Investment Profile

  • U.S Large Cap Universe
  • SMA or Delaware Ltd. Partnership
  • Invests in Exchange Traded Funds
  • 12-month initial lock-up
  • Monthly investments/withdrawals
  • Suitable for non-taxable/tax deferred
  • Inception date 1/1/2017
Tactical Large Cap Equity Investment Strategy

Investment Objective

The Peloton Tactical Large Cap Equity strategy invests exclusively in large public companies which are directly related to the S&P 500® Index. The primary objective is to provide investors with long-term capital appreciation over a full market cycle relative to the Russell 1000® Index and the S&P 500® Index. The strategy seeks to accomplish this by identifying and capitalizing on short-term price inefficiencies that occur based on seasonal patterns. We then work to exploit these inefficiencies through a series of trading strategies executed at specific times throughout each year.

Investment Philosophy

Our Tactical Large Cap Equity investment philosophy is based on the following core beliefs:

Markets are regularly influenced by seasonal patterns.

We believe that markets regularly display predictable seasonal patterns that occur at regular intervals and in specific time frames.

Mean reversion is driven by seasonal patterns.

We believe in the theory of mean reversion and that prices tend to seasonally fluctuate and revert back to prior patterns.

Seasonal patterns can be exploited.

We believe that cyclically sensitive sectors that are impacted by these predictable seasonal patterns can be exploited to generate higher excess returns.

Market Observations and Conclusions

Market Observations:

Cyclical and non-cyclical sectors each tend to experience similar average volatility throughout the calendar year.

Average returns for cyclical sectors tend to be far higher during certain seasons of the year than they are in others.

Non-cyclical sectors tend to be much less volatile during broad-market corrections than cyclical sectors.

Broad-market appreciation tends to be more likely in certain seasons of the year than others.

Market Conclusions:

Our disciplined seasonal trading strategy can allow us to capitalize on these regular and often predictable patterns, thereby reducing market uncertainty and increasing the opportunity for higher excess returns while assuming average or comparable market volatility.

By maintaining a significant overweight in non-cyclical sectors for a large minority of the year, we can strive to mitigate losses during sudden, broad-market corrections.

Through the use of derivatives, we can attempt to leverage high-probability, positive broad-market returns during certain strategic times of the year.

Incorporating seasonal trading strategies into our overall investment process can create greater portfolio diversification which ultimately reduces overall portfolio risk.

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