The US Long/Short combines two momentum strategies, one identifying the weakest performing stocks from the S&P 500 and Nasdaq 100 and the other selecting the top three global stock ETFs. The strategy can move between 100% long and 100% short exposure depending on market conditions and can, therefore, profit in both bull and bear markets.
Latest Update – 1 July 2020
Being the first trading day of July, it is time to rebalance our US long short portfolio. Regarding the ‘long’ ETF component of the portfolio, which as a reminder holds the top three ETFs, based on price momentum, there are three ETFs which qualify for this month. We already hold two of these, being QQQ:xnas and SPY:arcx, meaning members will need to buy the third ETF, which is VTI:arcx.
To the ‘short’ stock component, and again there are more than 10 stocks which now qualify, meaning that the short component will remain fully invested at 10 positions. We already hold six of these stocks, meaning we will need to close out four positions, and replace with four new short positions. The four positions to close are EXPE:xnas, MHK:xnys, TRV:xnys, and PXD:xnys. The four new short positions are UHS:xnys, AVB:xnys, ESS:xnys, and PSA:xnys.
As a reminder, this strategy rebalances on the 1st of each month (or the next business day if the 1st is a non-trading day). For specific details of closed trades, please see our closed trades page.
For historical trade updates please click here.
|Stock code||Stock name||Country code||Long short||Qty||Entry date||Entry price||Current price||Current value||Return percentage|
|-32||1 Jul 20||$154.64||$159.05||$-5,089.60||(2.85%)|
|-33||1 Apr 20||$149.14||$180.32||$-5,950.56||(20.91%)|
|-58||1 Jun 20||$85.98||$90.05||$-5,222.90||(4.73%)|
Darden Restaurants Inc
|-65||1 Jun 20||$76.86||$76.11||$-4,947.15||0.98%|
Essex Property Trust
|-21||1 Jul 20||$229.17||$239.37||$-5,026.77||(4.45%)|
Federal Realty Investment Trust
|-60||1 May 20||$83.27||$87.46||$-5,247.60||(5.03%)|
Marriott International Inc Class A
|-56||1 Jun 20||$88.50||$86.62||$-4,850.72||2.12%|
M&T Bank Corp
|-44||1 May 20||$112.08||$101.31||$-4,457.64||9.61%|
|-26||1 Jul 20||$191.89||$199.16||$-5,178.16||(3.79%)|
Invesco QQQ Trust Series 1 ETF
|76||1 May 20||$218.91||$250.49||$19,037.24||14.43%|
SPDR S&P 500 Trust ETF
|54||1 Jun 20||$304.32||$310.52||$16,768.08||2.04%|
Universal Health Services Inc Class B
|-53||1 Jul 20||$92.89||$93.18||$-4,938.54||(0.31%)|
Vanguard Total Stock Market Index ETF
|106||1 Jul 20||$156.53||$157.44||$16,688.64||0.58%|
* Quantities are based on investing US$5,000 per stock on the entry date for the short positions and US$16,666 per stock on the entry date for the long positions.
** All dollar values are in US dollars, and therefore returns are calculated as a US dollar return. Depending on whether or not you use hedging to manage your currency, exposure will determine whether you need to adjust returns to account for exchange rate effects.
US Long/Short Strategy
Long/Short strategies are generally considered to be market neutral and should, therefore, be capable of performing regardless of broader market conditions. This fact can make them a good portfolio for diversifying other ‘long only’ assets.
How To Follow This Strategy
Rivkin’s strategies are designed to be as easy as possible for investors to follow. To follow the US Long/Short strategy first requires that investors can short sell stocks. This can be done in a variety of different ways, but we recommend contracts for difference (CFDs) as a cheap and comfortable option to achieve this. Once this is in place, investors need to buy the long positions and short sell the short positions in the above table. The short positions have a portfolio weight of 10% each while the long positions are each 33.3% of the portfolio. Weights can drift over time as stock prices move, but we only recommend re-balancing stock weights if they stray too far from the target weight. The stock volumes shown in this table are based on a $5,000 investment per stock. Being a US strategy, this is priced in US dollars and therefore, to get the Australian dollar value, the current exchange rate should be applied.
Once per month, the list of stocks will be updated in what we call a ‘re-balance’. This means investors will need to look at the new list and sell any stocks that are no longer on the list. After these stocks are sold, the new stocks from the current table can be bought.
About The Strategy
The US Long/Short strategy was developed by Rivkin during 2018 and was rolled out the same year. Extensive back-testing was done to create and refine the strategy, and it is this back-testing that we rely on to give us increased confidence about future expectations. Please click here to find out more about the strategy.
Rivkin does not ever provide financial advice. Please consider your own circumstances before purchasing any of our products or acting on our general advice, for any Rivkin product or recommendation.
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