MBA Beta Allocation (MBA)

Managed Beta Allocation (“MBA”) is a systematic, rules-based portfolio management approach developed by our MBA & LifeCore lead manager Rob Ausdal. The MBA system aims to enhance portfolio returns and manage risk—primarily measured by Beta—relative to a specified benchmark (index, ETF, or mutual fund) over a complete market cycle. Secondary objectives include limiting portfolio volatility (standard deviation), minimizing drawdowns, generating Alpha, and optimizing Sharpe and Sortino ratios.

MBA is a long-term tactical management system. Once we’ve established the long-term primary trend, we tactically manage to that trend for the duration of the trend, minimizing trading as much as possible.

MBA methodology can be tailored to a wide variety of benchmarks across equity and fixed income markets, providing customized solutions aligned with individual Advisor or Advisory firm requirements. Our strategies may be implemented independently or incorporated into broader client portfolios to achieve specific investment goals, such as reducing portfolio Beta or managing downside risk.

MBA signals underpin our management of all LifeCore, MBA, and MBA MAXX portfolios, as well as allocations within our Hedge portfolios.

For professional Advisor and operational personnel due diligence only: The results of our model back-tests for our Hedge, LifeCore, MBA, MBA MAXX, and Probabilities portfolios, including returns and portfolio statistics are available here:   AdvisorPortfolios.modelbacktest

MBA Management Process

Step 1: Determine Primary Long-Term Trend
MBA utilizes proprietary monthly indicators to identify the long-term primary trend of a target benchmark, defining these trends approximately as:

• Equity Bull Trend: 12 to 30 months
• Equity Bear Trend: 3 to 20 months
• Bond Bull/Bear Trends: 3 to 12 months

Step 2: Tactical Intra-Trend Adjustments
Within each primary trend, MBA systematically applies rules-based intra-trend signals to manage portfolio exposure:

• Equity Bull Trends: Typically maintain full equity exposure (as defined by each strategy), reducing exposure tactically (to 75%, 50%, or 25%) based on the combination and timing of our intra-trend signals. Once we have a reduced equity exposure, under most circumstances the movement of any one intra-trend signal from bearish to bullish moves us back to full equity exposure.
• Equity Bear Trends: Typically hold zero equity exposure, allocating cash to short-to-intermediate maturity U.S. Treasury ETFs (as defined by each strategy). Equity exposure may be tactically increased (to 25%, 50%, or 75%) based on the combination and timing of our intra-trend signals. Once we have increased equity exposure, under most circumstances the movement of any one intra-trend signal from bullish to bearish moves us back to zero equity exposure.

Fixed Income Management:
MBA manages fixed income portfolios focusing exclusively on maturity and credit quality seeking to maximize total returns and control risk. Yield is not a consideration in the process:

• Bull Bond Price Trends (Falling Rates): Extend maturities, selecting from investment-grade corporate or U.S. Treasury ETFs based on proprietary credit-quality indicators.
• Bear Bond Price Trends (Rising Rates): Shorten maturities significantly, again adjusting ETF selection based on credit-quality signals.

Disclosures

IMPORTANT:
This communication is intended solely for professional advisors and operational personnel. Past performance, including back-tested data, does not guarantee future results. Model back-tests provided are hypothetical and subject to limitations, including the benefit of hindsight. Actual portfolio results may vary significantly due to transaction costs, management fees, market liquidity, timing differences, and other factors.

Investments involve risk, and portfolios managed using MBA strategies may lose value. Tactical management does not guarantee profits or fully protect against losses. Benchmark indices referenced herein are unmanaged and do not incur fees or expenses, nor can they be invested in directly. This information does not constitute investment advice or a solicitation to buy or sell securities. Please consult your financial advisor reg