The Milwaukee Company’s investment strategies are designed to generate alpha over the long term by lessening risk over the short term. Our strategies use academically tested risk management techniques such as dynamic asset allocation, trend following, mean variance optimization, and probability distributions in an effort to lessen declines in portfolio values during secular bear markets. At the same time, because the stock and bond markets must compensate investors for taking risk, risk management strategies should be expected to under-perform riskier strategies in time periods without major asset class corrections or when market volatility spikes during secular bull markets. This is the “cost” of avoiding drawdowns. The “return” is the likelihood of better performance over periods of time that include both ends of the market cycle.
Additionally, The Milwaukee Company monitors many widely accepted capital market risk signals and economic indicators in order to gauge the risk of the overall market and current economic conditions. The Milwaukee Company has developed a composite index of these indicators, which we refer to as the “Milwaukee Company Hedge Index” (or “MCHI”), to assist us in determining when a hedge against an equity market correction should be considered.