Economic Cycle Strategy (ECS)

Strategy Overview

The Milwaukee Company’s Economic Cycle Strategy (ECS) is a rules-based investment strategy that adjusts the amount invested in exchange traded funds (ETFs) that collectively represent the global stock and bond markets in reponse to its analysis of the current state of the U.S. business cycle.

 

More specifically, when the data utilized by ECS’ algorithm indicates the economy is expanding at an above-average rate (typically in the early stages following recessions), the strategy overweights stocks.  By comparison, ECS over-weights bonds when it appears the economy is contracting.  A neutral weighting that’s consistent with the investor’s personal risk tolerance is applied the rest of the time (i.e., when the economy is expected to grow at a “normal” pace).

model ECS.png

ECS uses The Milwaukee Company’s Economic Index (MCEI) to identify the current state of the economic cycle (see side bar).

Components

· · ·

  • Diversified Fund Universe

ECS consists of a diversified group of 12 low-cost ETFs that collectively represent significant components of the global securities markets.

 

  • Milwaukee Company Economic Index (MCEI)

MCEI uses a combined readring of the Chicago Fed National Activity Index (CFNAI) and a probit model of leading economic indicators to gauge the state of the economic cycle in real-time. 

 

  • Noise Reduction

The use of a probit model to confirm CFNAI readings not only delivers better results, but also helps in reducing the number of trades that would have been generated as a result of short-term signal noise.

graph for ECS.png

The Milwaukee Company℠ is a tradename of Estate Counselors, LLC. The information provided herein is believed to be correct and has been obtained from sources that we consider reliable, but we do not guarantee that this information is accurate or complete.  All expressions of opinion reflect our judgment at the present time, but are subject to change. Nothing found herein is intended to be a substitute for personal investment advice. The investments discussed herein are risky in nature and involve a substantial risk of loss, and we do not in any way warrant or guarantee the results you will experience.