A Year Later, It Still Works

Last August we took a quick look at the Bridges Tactical ETF (BDGS). It's equity centric and has a process for risk on and risk off that allows it to vary its equity exposure and pairing that with cash proxies. Last summer it was 71% in cash proxies and today it appears to be 43% in cash proxies. Like last summer, the equity sleeve appears to have more volatility than the S&P 500. Most of the equity names are stocks that have 2x versions trading. Last summer I said it's sort of a capital efficiency effect or maybe a barbell effect. 

Since that first blog post, the fund has done pretty much exactly what it said it would do. Decent upcapture, so it lags plain vanilla market cap weighting, with less volatility. 

The comparison to HEQT still seems to be reasonable. Portfolios 3 and 4 also create the same effect. Portfolio 5 captures the current positioning but not fair to BDGS because the ETF can adjust the mix. Still though, Portfolio 5 is surprisingly close to BDGS' performance. 

A year later the strategy seems to be valid. No strategy or fund can always be best and any strategy will at times struggle, that goes with the territory but it's hard to argue with a fund that does what it says it's going to do.

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.