Our Process
Our Disciplined Process
Ocean Park Asset Management participates in global uptrends, focuses on depth and diversification in the security selection process, and sells according to a Trailing Stop Discipline1. When a decline in the markets meets our already-determined sell signals, we move swiftly to reallocate our portfolios, and we sell quickly, without emotion, speculation, or market pontification. Importantly, in the absence of uptrends, our products have the flexibility to quickly and temporarily move to cash allocations— up to 100%.
We believe our process, outlined below, sets us apart.
When To Buy
Trend Following
Trend Following
This is an illustrative example of how Ocean Park Asset Management, LLC applies its buy-trend methodology to define buy levels/signals for potential security holdings. This is not a representative example of any particular security or client portfolio and is provided for educational purposes only.
- We evaluate buying opportunities when our quantitative decision rules identify an uptrend in the price of a security.
- An uptrend is determined by a security’s price rising above both the recent low of its upper band and a secondary moving average.
- A security’s bands are related to its historic volatility and are offset above and below a short-term exponential moving average.
What To Buy
Security Selection
Security Selection
- We seek to buy securities exhibiting strong risk-adjusted returns during a recent uptrend.
- Additional metrics, such as strength of the recent uptrend, historical volatility, and correlation to existing holdings, are considered in portfolio construction.
- If there are multiple securities with buy signals in the same asset class, preference is towards buying securities with better, recent risk-adjusted performance.
- For multi-asset-class portfolios, if there are a number of securities with buy signals across different asset classes, risk and diversification are also considered, with the goal of preventing one asset class from having an outsized impact on the portfolio.
Ocean Park focuses on depth and breadth in asset class selection and seeks to buy securities exhibiting strong risk-adjusted returns during a recent uptrend.
Fixed Income Asset Class Breadth
It is uncommon to see a fixed income asset class at the top of performance charts year after year. Unconstrained to an index, Ocean Park is able to invest in fixed income classes with different return, risk, and correlation profiles.
Yearly Performance of Fixed Income Asset Classes
Source: Bloomberg, 12/31/24
Bloomberg US Agg = Bloomberg US Aggregate Bond Index | Convertibles = Bloomberg US Convertibles Composite Index | Preferreds = ICE Exchange-Listed Preferred & Hybrid Securities Index | Bank Loans = Morningstar® LSTA US Leveraged Loan Index | High Yield Bonds = Bloomberg US Corporate High Yield Index | Corporate Bonds = Bloomberg US Corporate Bond Index | Municipal Bonds = Bloomberg Municipal Bond Index | International Bonds = Bloomberg Global Aggregate ex-USD Index | Emerging Markets = Bloomberg Emerging Markets USD Aggregate Bond Index | High Yield Municipals = Bloomberg Municipal High Yield Index
See index definitions for each asset class
Equity Asset Class Breadth
Like fixed income asset classes, top performing equity classes may change from year to year. Ocean Park has the ability to invest in asset classes based on size, style, factors, and geographic location.
Yearly Performance of Equity Asset Classes
Source: Bloomberg, 12/31/24
Dividend = Dow Jones U.S. Select Dividend Index | Momentum = S&P 500® Momentum Index | NASDAQ-100 = NASDAQ 100 Index | S&P 500® = S&P 500® Index | Mid Cap Growth = S&P MidCap 400® Growth Index | Mid Cap Value = S&P MidCap 400® Value Index | Small Cap Growth = S&P SmallCap 600® Growth Index | Small Cap Value = S&P SmallCap 600® Value Index | MSCI EAFE = MSCI EAFE Index NR | MSCI EM = MSCI Emerging Markets Index NR
See index definitions for each asset class
When To Sell
Trailing Stop Discipline1
Trailing Stop Discipline1
This is an illustrative example of how Ocean Park Asset Management, LLC (“Ocean Park”) applies its Trailing Stop Discipline1 (“Discipline”) to define sell levels/signals for security holdings in decline. This is not a representative example of any actual or particular security or any actual client portfolio and is provided for educational purposes only. Ocean Park’s proprietary Discipline is used to support our disciplined risk management process. The Ocean Park Mutual Funds and Ocean Park ETFs (collectively, “Ocean Park Funds”) utilize this Discipline directly in the management of all underlying Ocean Park Fund holdings. Ocean Park Strategies, Models and Programs utilize this Discipline directly in the management of non-affiliated holdings. Where Ocean Park invests in its affiliated Ocean Park Funds, this Discipline is applied at the underlying funds level, not on the Ocean Park Funds themselves.
- We will sell a security when our quantitative decision rules identify a downtrend in the price of a security.
- A downtrend is determined by a security’s price falling below the recent high of its lower band – an event which triggers a sell signal.
- Our Trailing Stop Discipline1 seeks to limit the impact of a further decline in value of a security on the overall portfolio.
- Our Trailing Stop Discipline1 is applied across positions in each of our managed portfolios and monitored daily.
- When a position is sold, we may keep the proceeds in cash or buy another security.
Cash returns tend not to be correlated to those of other asset classes. In times of turbulence and in absence of uptrends across our target investment opportunity set, our portfolios can tilt to 100% cash asset class exposure.
Once in cash and equivalents, we can invest those funds in money market funds and overnight sweep vehicles when available.
Fixed Income Asset Class Definitions
Bloomberg US Agg = Bloomberg US Aggregate Bond Index: A broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).
Convertibles = Bloomberg US Convertibles Composite Index: Bloomberg US Convertibles Composite Total Return Unhedged USD is designed to represent the U.S. convertible securities market, encompassing both convertible bonds and convertible preferred stock.
Preferreds = ICE Exchange-Listed Preferred & Hybrid Securities Index: a market capitalization weighted index composed of preferred stock and securities that are functionally equivalent to preferred stock including, but not limited to, senior and subordinated debt (collectively, “Preferred Securities”).
Bank Loan = Morningstar® LSTA US Leveraged Loan Index: a market-value weighted index designed to measure the performance of the US leveraged loan market.
High Yield Bonds = Bloomberg US Corporate High Yield Index: measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Bloomberg EM country definition, are excluded. The US Corporate High Yield Index is a component of the US Universal and Global High Yield Indices. The index was created in 1998, with history backfilled to July 1, 1983.
Corporate Bonds = Bloomberg US Corporate Bond Index: measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by US and non-US industrial, utility and financial issuers.
Municipal Bonds = Bloomberg Municipal Bond Index: flagship measure of the US municipal tax-exempt investment grade bond market. It covers four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds.
International Bonds = Bloomberg Global Aggregate ex-USD Index: flagship benchmark that measures the performance of global investment-grade bonds excluding those denominated in U.S. dollars. It includes sovereign, government-related, corporate, and securitized debt from developed and emerging markets outside the U.S.
Emerging Markets = Bloomberg Emerging Markets USD Aggregate Bond Index: a flagship hard currency Emerging Markets debt benchmark that includes fixed and floating-rate US dollar-denominated debt issued from sovereign, quasi-sovereign, and corporate EM issuers. Country eligibility and classification as Emerging Markets is rules-based and reviewed annually using World Bank income group and International Monetary Fund (IMF) country classifications.
High Yield Municipals = Bloomberg High Yield Municipal Bond Index: measure of the US municipal tax-exempt non-investment grade bond market. Included in the index are securities from all 50 US States and four other qualifying regions (Washington DC, Puerto Rico, Guam, and the Virgin Islands). The index includes state and local general obligation bonds and revenue bonds.
Equity Asset Class Definitions
Dividend = Dow Jones U.S. Select Dividend Index: aims to represent the U.S.’s leading stocks by dividend yield.
Momentum = S&P 500® Momentum Index: is designed to measure the performance of securities in the S&P 500® universe that exhibit persistence in their relative performance.
NASDAQ-100 = NASDAQ 100 Index: is made up of equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange.
S&P 500® = Standard & Poor’s 500® Index: A market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The S&P is a float-weighted index, meaning company market capitalizations are adjusted by the number of shares available for public trading.
Mid Cap Growth = S&P MidCap 400® Growth Index: measures constituents from the S&P MidCap 400® that are classified as growth stocks based on three factors: sales growth, the ratio of earnings change to price, and momentum.
Mid Cap Value = S&P MidCap 400® Value Index: measures constituents from the S&P MidCap 400® that are classified as value stocks based on three factors: the ratios of book value, earnings and sales to price.
Small Cap Growth = S&P SmallCap 600® Growth Index: measures constituents from the S&P SmallCap 600® that are classified as growth stocks based on three factors: sales growth, the ratio of earnings change to price, and momentum.
Small Cap Value = S&P SmallCap 600® Index: measures constituents from the S&P SmallCap 600® that are classified as value stocks based on three factors: the ratios of book value, earnings and sales to price.
MSCI EAFE = MSCI EAFE Index NR: is a performance benchmark for the major international equity markets, It includes companies in 21 countries in Europe, Australasia, and the Far East (East Asia).
MSCI EM = MSCI Emerging Markets Index NR: is a selection of stocks that is designed to track the financial performance of key companies in fast-growing nations. It is one of a number of indexes created by MSCI Inc., formerly Morgan Stanley Capital International.
1 Trailing Stop Discipline (“Discipline”): This proprietary Discipline has the objective of limiting the magnitude for portfolio drawdowns. The Discipline is based on a manual process that defines sell levels/signals for security holdings in decline, as measured by its price falling below the recent high of its lower band. These are not market orders. Ocean Park utilizes this Discipline directly in the management of non-affiliated holdings. Where Ocean Park invests in its affiliated Ocean Park Mutual Funds or Ocean Park ETFs (“Affiliated Funds”), the same Discipline is applied at the underlying funds level, not on the Affiliated Funds themselves. Please see our Form ADV Part 2A for information on conflicts of interest that exist as a result of Ocean Park investing in Affiliated Funds.
Resources
