This page combines each individual model into the composite Movement Capital strategy used in client accounts.

Model allocations change based on a client’s time horizon and risk tolerance, but these are the baseline allocations for an investor with a 20-year time horizon and moderate risk tolerance:

ModelAllocation
Active Trend25.0%
Active Macro25.0%
Passive Stocks25.0%
Passive Bonds25.0%

This composite portfolio has 75% in stocks (when both active models are in the market) and 25% in bonds, and is a 50/50 split between active and passive models. It’s important to note that I don’t just run this single strategy – model allocations are unique to each client. For example, I implement a more conservative composite strategy for retired investors.

The graphs below show the long-term hypothetical returns and risk of the example composite strategy relative to a passive benchmark. The benchmark shown is a 75/25 stock/bond split, with the 75% in stocks divided equally between Vanguard’s total market U.S. and international funds. The 25% in bonds is in Vanguard’s total bond market fund.

All data includes fund expense ratios, slippage, and trading costs. A flat annual management fee of $3,500 is deducted from the Movement Capital strategy:

The table below contains summary statistics for the composite strategy and its benchmark:

StatisticStrategyBenchmark
Compound Return8.9%7.1%
Max Drawdown-19.8%-45.3%
Longest Drawdown32 months43 months
Best Year+22.3%+29.6%
Worst Year-11.1%-32.5%

It’s important to not look in the rear-view mirror and extrapolate recent returns into the near future. Stock valuations are high and interest rates are low. Future stock and bond returns will likely be lower than what the most recent cycle provided. That being said, the Movement Capital strategy is prepared to navigate future volatility in a low-cost and systematic way.

The composite strategy is balanced across multiple dimensions. It’s globally diversified, uses active models to lower the probability of a large drawdown, is designed to weather periods of high inflation, uses low-cost index funds and tax-efficient ETFs, and strikes a balance between active and passive approaches.

The strategy is Movement’s best solution for achieving long-term investment growth while minimizing risk.

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