Palo Alto, CA (May 1, 2023)
Merlyn.AI, a producer of innovative, AI-powered investment indexes, announced today the introduction of TrendGuard™, an enhancement to the firm’s bull market strategies that seeks to provide a performance floor when market momentum is weak. TrendGuard is designed to work in tandem with Merlyn.AI’s StormGuard™ feature that assesses bull versus bear conditions. Together, these defensive components comprise a Dual Defense™ strategy that attempts to mitigate downside equity exposure.
TrendGuard introduces a defensive backstop that competes against an index’s category momentum leaders during the index bull market portfolio construction stage. The algorithm selects the backstop whenever its momentum is highest. This line of defense recognizes the limitation of momentum-based analysis that may occur in an irregular bull market cycle like 2022-2023 and seeks to achieve a performance floor.
StormGuard is a proprietary U.S. equity market risk assessment software that seeks to determine when a bull or bear market is indicated using price-trend, market momentum, value sentiment, and market volatility metrics. Merlyn.AI’s indexes automatically switch between equity and defensive positions based on StormGuard’s bull/bear assessment.
Scott Juds, Merlyn.AI’s CEO, explained, “We believe momentum detection is a key part of fund selection for both bull and bear market holdings. The challenge is to see past market noise to select momentum leaders. In an unusual equity market like we’ve experienced this year and last, momentum signals have been sometimes less reliable. TrendGuard adds an important element to our defensive strategy that kicks in when momentum behaves like this. Together with StormGuard, this approach presents what we call “dual defense.”
The Merlyn.AI WIZ Bull-Rider Bear-Fighter and Merlyn.AI DUDE SectorSurfer Momentum Indexes strive to select the top momentum leaders during bull markets and opportunely shift to their Bear Market Strategy (bonds, treasuries, gold ETFs) when markets appear to have an elevated risk of decline. Merlyn.AI performs market analysis and portfolio construction using advanced signal processing techniques and the ground-breaking application of three forms of AI:
- Genetic Algorithms evaluate up to 400 ETFs to select sets of candidate funds for an ever-evolving population of competing momentum strategies. They then choose only the top momentum performers for the portfolio. This helps mitigate the risk of human-based hindsight selection bias in the ETF selection process and enables the index to adapt to changing market conditions.
- Fuzzy Logic is used to evaluate 14 characteristics of the market to assess when it appears to have an elevated risk of decline. If the result exceeds a fixed threshold, the index will switch to a Bear Market Strategy automatically, seeking to maximize profits even during downturns.
- Adaptive Tuning assess past market data and tunes the algorithms’ momentum filters using differential signal processing and match filter theory – both of which may improve the probability of making better investment selections.
Palo Alto-based Merlyn.AI uses advanced signal processing techniques and groundbreaking AI to analyze equity market conditions and construct index portfolios in changing markets. The company seeks to identify market momentum leaders during bull market conditions and switch to fixed income and other defensive positions when bear market conditions or weak momentum is indicated. Merlyn.AI indexes leverage technology developed by Seattle-based SumGrowth Strategies, LLC. Merlyn.AI and SumGrowth Strategies are not affiliated with its indexing agent, Solactive AG. Visit us at www.Merlyn.AI.
Merlyn.AI, SwanGuard, and StormGuard are trademarks of SumGrowth Strategies, LLC. Merlyn.AI Corp. is not a registered investment advisor and does not provide investment advice specific your life situation.