How the R&I Portfolio is Setup

R&I run a relative momentum model which analyses markets to find the top momentum stocks within the ASX200 and S&P500.

The process works as follows:

  1. On the last trading day of the month R&I rank all stocks within the ASX200 & S&P500 based on a relative momentum score.
    These stocks are ranked from strongest to weakest and members are given the 20 highest ranked stocks within these markets.
  2. For the R&I portfolio, we allocate capital equally between the top 10 ranked stocks – being 10% per position.
  3. When the new month arrives, R&I once again rank the stocks with the relevant market. If a stock falls out of the top 10 ranked stocks it is sold and removed from the portfolio. We then buy the stock that has moved into the top 10.

How to allocate capital & the re-balance the model portfolio

For New investors: Allocate equally between each position

Example: If you have allocated $100,000 to the portfolio, buy $10,000 in each position

Existing investors: Divide the net cash amount from the sales divided by the number of new positions to determine
the position size.

Example: 3 sales and 3 buys on rebalance. If the proceeds of the sales amount to $28,000, then allocate $9,333 to the 3 new positions ($28,000/3 = $9,333)

Relative momentum is a strategy that is used by institutional investors and hedge funds. These funds typically apply a rolling ranking model which would be difficult for the private investor to implement.
R&I have tested and developed the strategy so the private investor can implement the momentum portfolio to deliver superior risk-adjusted returns compared to a buy and hold strategy over a 5 year period.
This portfolio structure is complementary to other investments within your portfolio.
We’ve outlined example of how R&I fits in your here