We believe the days of static asset allocations should be coming to a close. Likewise for a single investment style working in all environments. Instead, we think that today’s forward-thinking investment managers and investors need to detect changing market conditions, then act with foresight rather than “rush-for-the-door” hindsight.
That’s why our managers for the Mission-Auour Risk-Managed Global Equity Fund use a proprietary, multi-factor investment model to analytically characterize markets across a spectrum of risk. Developed by Auour Investments, it’s called the Auour Regime Model (ARM), and it enables us to:
- Use fundamental global market data to gain insight into risks in various asset classes around the world
- Navigate market dynamics by adjusting asset allocations to better match the expected risk cycle
- Use this dynamic adjustment of assets to seek to avoid losses in market downturns, while potentially preserving performance in rising markets
(Note from the fund managers: In ARM, the word “Regime” is used according to its definition as a planned or systematized way of doing things—as in “a health regime”-as opposed to its other authoritarian, governmental meaning.)
Seeing risks ahead: Key variables.
With the Auour Regime Model, we use sophisticated quantitative modeling, logic, and empirical data to form our downside portfolio protection strategies. In doing so, we consider these key variables:

Fine-tuning: Focus on characteristics that work within the regime
We use five risk regimes that range from an aggressive posture during periods of economic recovery to a risk-off designation that is recommended for periods of financial crisis such as the banking crisis of 2008. Here’s what we mean by “investing to the regime”:
|
Risk Off |
Conservative |
Moderate |
Growth |
Aggressive |
Economic Characterization |
Banking Crisis
(no place to hide) |
Economic Contraction |
Maturing Economic Cycle |
Broad Based
Economic Growth
|
Economic Recovery |
Economic Stability |
Cash |
Only Developed Markets |
More Developed Markets |
←–––––––→ |
More Emerging Markets |
Asset Size |
Cash |
Defensive Large
Company Exposure |
More Large Company Exposure |
←–––––––→ |
More Small Company Exposure |
Global Exposure |
Cash |
Primarily U.S. |
More U.S. |
←–––––––→ |
More International |
Investment Style |
Cash |
High Quality |
Growth Focused |
←–––––––→ |
Value Focused |
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