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Strategies
Country Rotation Strategy
The Outcome Country Rotation strategy focuses primarily on emerging market equities. The strategy uses a data-driven, machine-learning-based approach to invest in large, liquid ETFs, with the objective of delivering superior long-term returns.
Go where the puck is going
- Hockey star Wayne Gretzky famously said, “I skate to where the puck is going, not where it has been.”
- Successful investing necessitates looking forward rather than at what has happened or what is happening.
- We believe that emerging market equities will dramatically outperform developed market equities for the foreseeable future.
Emerging Markets: Faster Economic Growth
EM vs. DM - Projected Real GDP Growth (2021 - 2025)
Source: International Monetary Fund, World Economic Outlook Database, October 2020
Not Your Parents’ Emerging Markets: Country Composition
MSCI Emerging Markets Index: Vulnerable vs. Stable Country Weights
Vulnerable countries
Have poor external balances, are reliant on foreign savings and are more exposed to external outflows (South Africa, Chile, Argentina, Colombia, Egypt, Pakistan, Brazil, and Turkey).
Stable countries
Have strong external balances, are not reliant on foreign savings and are less exposed to external outflows (China, South Korea, Taiwan).
Source: FactSet Research Systems Inc.
Portfolio Construction
Our Approach
-
step 1
Eligible ETFS
Country IndexesChina (EM)
South Korea (EM)
Taiwan (EM)
Brazil (EM)
Eurozone (DM)
Japan (DM) -
step 2
Rank Country Indexes
A.I. Driven Process
-
step 3
Adjust portfolio
Top Ranked CountriesTactically allocates exposures within and across Developed and Emerging Market equities
In god we trust...
all others bring data.
- “All investment decisions should be based on what can be measured rather than what might be predicted or felt. People operate with beliefs and biases. To the extent that you can eliminate both and replace them with data, you gain a clear advantage.” — John W. Henry
- As is the case with all the Outcome mandates, our Country Rotation strategy relies on a rules-based process derived from big data analysis and machine-learning.
