BOSTON, Mass., May 14, 2018 (GLOBE NEWSWIRE) -- 55ip, an investment strategy engine that enables advisors to custom-build portfolio strategies using industry-leading investment science, today released its May 2018 Market Risk Indicator (MRI) Score. The MRI Score is a proprietary measure that seeks to assess the likelihood of extreme market conditions and help investors protect their portfolio from significant losses. This score can range from 0 – 100 percent, with 0 percent being the lowest possible risk assessment. In May, the MRI Score decreased slightly to a value of 41 percent – from April’s highest recorded Score in two years at 48 percent.
This data suggests that such readings are accompanied by fewer down moves relative to up moves, but most importantly the magnitude of the down moves are stronger than the magnitude of the up moves. For those clients who cannot afford to face extreme losses, or do not have time to recover from such losses, it is prudent to increase cash positions and/or decrease overall risk.
“The May MRI Score remains in the intermediate to high range and implies a higher likelihood of an extreme market move than earlier this year,” said 55ip founder and chairman Dr. Vinay Nair. “As was the case last month, the fundamentals across macro indicators, such as employment, and inflation and valuations, such as price multiples or earnings, remain stable and present no cause for immediate concern.”
Overall, market conditions still indicate high perceived risk as identified by statistical measures of return distributions. The intraday return patterns suggest high instability, making the distribution of returns more ambiguous than usual. Across asset classes, including their interactions, the past month’s returns are also statistically different from what we have seen in the recent past suggesting the need for caution. Option markets also suggest a higher downside to upside risk.
While some indicators of financing costs (such as short-term price trend) continue to suggest a defensive stance, others appear to have normalized. This is a driver of the slight decrease in MRI. For example, unlike last month, credit spreads are no longer in a downtrend suggesting lower financing risk from high yield and fixed income markets. Given the importance of energy in high yield markets, the uptrend in commodity markets has been a driving source of this normalization.
55ip designed the proprietary MRI Score as a quantitative way to assess the likelihood of extreme market conditions and help investors protect their portfolios from significant losses. The MRI Score aggregates indicators across valuation, macroeconomic conditions, financing indicators and statistical measures of return distributions.
For the full Market Risk Indicator monthly update report, visit www.55-ip.com. For more information or to speak with a 55ip spokesperson, contact 55ip@ficommpartners.com.
About 55ip
Founded in 2015 and headquartered in Boston, 55ip is an investment strategy engine that provides partner firms (financial advisors and wealth managers) the capabilities to build intelligent, custom models for their clients on white labeled software. 55ip’s proprietary investment science addresses the four most common frictions that get in the way of client outcomes – taxes, high fees, extreme losses, and time – while automating the entire investment management process so advisors can focus on growing and scaling their practices.
All advisory services are provided by 55I, LLC, a SEC registered investment advisor. More information is available at https://www.55-ip.com.
Disclaimer
55ip is the marketing name used by 55 Institutional Partners, LLC, an investment technology developer, and for investment advisory services provided by 55I, LLC, an SEC-registered investment adviser. These materials are intended for Registered Investment Advisors only and describe a risk management strategy that may not work as intended, in part because the strategy is not modified more frequently than monthly. As a result, the strategy cannot be counted on to provide protection to client portfolios. Even when using the strategy, portfolios remain subject to multiple risks, including the risk of loss of the entire amount invested. 55ip has been calculating the MRI monthly and applying it to managed assets since April 2016. 55ip has calculated a hypothetical monthly MRI back to April 2004 using varying inputs and blends of indicator categories. Registration does not imply any certain level of skill of training.
The information contained herein is subject to change without notice, is not complete and does not contain certain material information about the investment strategy, including additional important disclosures and risk factors associated with such investment and information about fees, trading costs and taxes. Neither the U.S. Securities and Exchange Commission nor any state securities administrator has approved or disapproved, passed on, or endorsed, the merits of this document.