Robert Johnson, Chairman, CEO & Co-Founder and Gerald Jensen, CIO & Co-Founder of Economic Index Associates discuss the Nasdaq IFED US Large-Cap Index (Nasdaq IFED-L), and how advisors can leverage the active index to generate alpha and navigate changing market conditions.
Economic Index Associates (EIA) and Nasdaq partnered to launch the Nasdaq IFED US Large-Cap Index (Nasdaq IFED-L). IFED-L is an active methodology that adjusts its index composition based on shifts in Federal Reserve policy.
“Our methodology uses Fed policy signals and key firm metrics to select portfolios that are best positioned to benefit from existing market conditions,” says Johnson. “The methodology is both a top-down and a bottom-up methodology. It’s a top-down methodology because the Fed policy signals define the market environment, and it’s a bottom-up methodology because the stock selection is based upon 12 firm-specific metrics.”
Nasdaq IFED-L was launched on June 9, 2020 and has significantly outperformed the S&P 500 since its launch ( as of July 20, 2022). In its portfolio, five of its top ten firms are financials and three of the top ten are IT. The index has tilted towards firms that have very strong balance sheets and occupy leading positions in their respective market niche.
Nasdaq IFED-L is a long-term, active strategy that pursues alpha by selecting stocks based on monetary conditions. Nasdaq IFED-L provides a strong historical return and downside risk profile.
Economic Index Associates, LLC (EIA) is a licensor and developer of active index strategies. EIA was founded by Robert Johnson, Gerald Jenson, and Luis Garcia-Feijoo, all of whom are experts on monetary policy. Johnson, Jenson, and Garcia-Feijoo wrote Invest With the Fed, a book of their research published in 2015 by McGraw-Hill.
For more insights on this topic, catch the replay of Nasdaq’s webcast: Alpha Capture: Capitalizing on Fed Policy.
Investors have become increasingly concerned about the interplay between inflation, rising rates and their portfolio returns. Will we see stagflation return or a recession, a soft landing or a hard landing? Whichever scenario unfolds, investors should focus on maintaining equity exposures that align with the changing market environment.
Join us to learn more about the:
- Effectiveness of using Fed signals to position a portfolio in changing market conditions
- Key ratios connecting Fed monetary environments and drivers of equity returns
- Invest with the FedTM (IFED) investment strategy
- Nasdaq IFED US Large-Cap Index (Nasdaq IFED-L) performance
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