THE HAYS ADVISORY ASSET ALLOCATION MODEL
The goal of Hays Advisory's model-driven discipline is to move more assets away from stocks when the model indicates higher market risk and allocate more assets to stocks while in the early stages of the up cycles. This approach is not a short-term market timing strategy. It is also unlike a typical "style-box" strategy that remains fully invested in all market environments regardless of the risk-reward potential.

The approach has an inherent long-term bullish bias, but its tactical nature allows the flexibility to move away from equity positions to cash or bonds when risk is deemed high.

THE HAYS PROCESS

The Investment Committee implements the model by closely examining numerous market indicators in three main categories: Investor Psychology, Monetary Conditions, and Market Valuation. Correlated to past market performance, these indicators are measured, scored, and weighted based on their historical utility and produce the firm's long-term market outlook. At its core, this quantitative model's indicators are designed to reveal how investors feel, how liquidity can impact the market, and how equities are valued. These categories are complemented by the fourth leg of the Hays investment process: the Market Trend Analyzer, a proprietary tool that utilizes moving averages and price movement to recommend defensive moves in the portfolio in the event significant market declines occur when the core indicators are not suggesting a defensive stance. The Market Trend leg is designed to buffer serious, secular market declines not forecasted by the other three model inputs.

This unemotional approach directs the asset allocation moves of the Investment Committee; there is very little subjectivity involved. The model makes it possible to raise cash when data suggests market risks are high and then add to equity positions as the long-term outlook improves. The Hays model guides asset allocation decisions for all portfolios managed by Hays Advisory.