A New, Dynamic Index Type
Dynamic Investments open a vast new world of opportunities and sales for index developers and vendors. This page discusses how and why.
Dynamic ETF Pools - used by Dynamic Investments - are Assets!
You have read in the Dynamic Investments area of this site that one component of all DIs is a Dynamic ETF Pool or DEP. The purpose of the DEP is to hold ETF purchase candidates for the DI that it ranks periodically to select and buy the one that is moving up most strongly in current economic conditions. This process gives the DI market sensitivity and enables it to hold only ETFs that are moving up in price at time of purchase and to avoid or sell those that are trending down. This process makes the investment "dynamic." And this is key to producing returns that today's financial "experts" will say are impossible.
Critical to a Dynamic Investment's performance is the list of ETFs placed by a designer in the DI's DEP. To produce top performance a DEP should contain a diverse set of ETFs. A well designed DEP will hold at least one ETF that is moving up in price in any economic environment.
For example, in its simplest form, a DEP should include a Stock-based ETF and a Bond-based ETF, two investments that typically move in opposite directions. The NAOI Basic DI does just this. It holds only a total Stock market and a total Bond market ETF in its DEP and has earned an average return of over 30 % + per year over the past decade as shown on the home page of this site!
Yet there are times when ETFs for other assets, markets and/or market segments are moving up in price more strongly than either a total Stock or Bond market ETF. There are hundreds of ETFs for designers to choose from to create a DEP that captures these returns.
There is no way to calculate which set of ETFs will work best for meeting a DI goal. The only way to find an optimal set of ETFs for a DEP is to test, test and test some more. This makes the discovery of an optimal set of ETFs for a DEP a very valuable asset for the designer / developer.
Optimal Dynamic ETF Pools (DEPS) are Valuable, Proprietary Indexes!
When an optimal set of ETFs is found for a specific investing goal it can be viewed in the same manner as today's standard proprietary Indexes and it may be classified as "intellectual property" of the developer. As such, a "winning" DEP can be a significant source of revenues for its owner who can then license its use to DI designers. With the introduction and widespread use of Dynamic Investments, the meaning of the word "index" is expanded along with the benefits that will accrue to those that create them.
The NAOI is available to consult with existing index managers and sellers to train on how to create this new index type. Click here for more information on how to get started creating Dynamic Investment DEP/Indexes today!
Also if you are an Index Creator, signup to our Email Updates list at the bottom of each page of this site. Get notified first when the NAOI creates new, powerful DEP Indexes. And contact us at any time using the information found here.