Beacon Tactical Risk

The Beacon Tactical Risk Fund seeks to participate in the equity market to capture reasonable upside in bull markets and seeks to protect principal through a mechanical stop-loss process when market conditions weaken.

Beacon follows the modern efficient-market theory, which believes that markets are generally efficient and, therefore, a buy-and-hold strategy yields the best long-term results. However, we also recognize that markets at times become irrational and bubbles are created that eventually burst with the potential for creating devastating losses for the retail investor. Beacon’s systematic buy-sell criteria minimize the impact of emotional investing while utilizing a trailing stop loss strategy, designed to minimize the impact of these devastating losses while the market corrects.

The Beacon Tactical Risk Fund is diversified across 11 different market sectors. Rather than attempt to predict which sector, such as technology, health care or energy, is going to be in favor, these portfolios invest in all sectors. The buy and sell triggers for the stop loss are based on the performance of our internal benchmark (the “Stock Index” portfolio). Beacon recalculates the performance of the “Stock Index” portfolio daily. When that index reaches its highest value point and then drops 10% from the high watermark; that is the target trigger to automatically sell out of all equity positions held within the model. The proceeds from the equity liquidations are then invested equally amongst three fixed income positions. This 100% fixed income allocation is maintained until our buy trigger is initiated. The buy trigger is also based off the performance of the Stock Index portfolio. However, unlike the sell trigger, the buy trigger has a range of initiation; the buy trigger can range from 15% to 25% from the Stock Index’s low watermark. The amount of rebound required from the bottom is dependent on two factors; time and loss. The longer it takes the index to reach its lowest value, the higher the required rebound will be.