Summit's Harden on Low Volatility Investment Strategy (Audio)

tenths of one percent. The down now at eighteen thousand, five hundred fifty two. The ten year down five thirty seconds, yield one point five seven percent. Gold up four fifty the ounce to thirteen forty seven, a gain of three tenths of one percent. Crude oil West Texas Intermediate up two percent to day of ninety cents forty sixty four barrel for West Texas Intermediate Crude. I'm Charlie Palett, and that's a Bloomberg Business Flash. You're listening to Taking Stock

with Kathleen Hayes and Pim Fox on Bloomberg Radio. He hails from Bountiful, Utah. David Harden is the president and the chief investment Officer of Summit of Global Investments, helping to manage more than five and twenty million dollars of customer assets, and he's here to tell us about investing without volatility. David Harden, thank you very much for being with us. Good afternoon, Jim, glad to be with you today. Tell us your strategy about investing with the context of volatility,

low volatility and manage risk. Absolutely glad to. One of the things that we specialize here is downside protection. And so in the market that's volatile or that has future volatility, providing downside protection I think is very very important. And so what we look to do with our strategy is look how stocks fit together from a risk perspective, what stocks look to outperform from a return perspective, followed with

constraints so other risks don't come into the portfolio. And lastly, probably one of the best things that we're going to do is we do a in a mental risk overlay on every stock that we buy. In other words, we want to make sure there's no downside catalysts when we purchased that stock for investors. Okay, So here we are a situation where we've seen these new highs and the major market indexes, and we are watching the FED over one shoulder and earnings over another. Or maybe we're there,

not behind us, we're looking ahead of us. Why don't your view in a nutshell of the market so you can tell us how you're applying the strategy according to what you what you think is driving the market, and where you think it's heading. Absolutely, thanks Kathleen. So from a from a standpoint of overall market, I would say I'm pretty neutral to maybe a little bit negative. I was positive on the FED even though today is what kind of caused the Fed to cause the markets to

go down. I think was comments from the President Dudley and also from San Francisco President John Williams last night and those comments today I think seemed to say that the Fed's trying to tell us something, and that's that I think the rake hike is coming. I don't think they like a lot of uncertainty coming out of the FED. They want more stability for the markets. But reality, I

think I'm above that. We may see a rate hike here in two thousand sixteen, primarily because we're up over for the last six months, so with in place and still in check. Typically i'd say it fed's probably positive overall for the market, but right now a little bit uncertainty, and there's a lot of speaking opportunities for the FED coming up in the next week, so I think the Fed's going to take over here and drive some of the market. But once that settles down, I see overall

the FED positive. I think the thing that's causing me to be more neutral to negative as you look at the earnings of the p s of the s and P five hundred, for example, we're at the high end of the range, and I think from a stock perspective, we're very vulnerable to economic disappointments, and so with the P at the high end of the range, you look at the risk. On the other hand, I think we're under priced with risk. So look at the VIX down in the twelve eleven range. I think we're under pricing

the risk that's ahead. Be that, you know, for Congress and the and the rhetoric coming out of Washington, be it like I said, uh, disappointing economic outputs and what have you. I think for me, I see cloud these guys ahead. I see a little bit more uncertainty. I'm not sure we can continue on such a great path. Could we? Yes, But the fundamentals really don't support that for the US, and so we need to protect against that.

That's really what we're trying to do with our strategy. David, How does that affect how you run the Summit Global Investments US Low Volatility Equity Fund. This is the mutual fund to symbol s I l v X. It has got a performance of nearly ten percent year today. Compare that with the SMP five of a six and a half percent gain. What we're trying to do here is we're very concerned about valuation. It's only one factor, and we don't want just one factor to drive how you invest.

But we're very cautious and so in this market where evaluation is really what's going to be one of the things that's going to drive us going forward, we want to look very carefully. So when we do a fundamental risk overly on companies, we're not looking for just for example, their filings with the SEC, for their transparency with their management, for their you know, CEO turnover, and all the things

that go into downside risk. But we're also looking at valuation, and it's one of our factors in our alpha as well, trying to look for out performance. So when you look at not just valuation, but coupled that with growth, coupled that with quality, and coupled that with a number of other factors, we feel like putting those together, it's what's really helping us move forward and outperform. So far, what happens if Altilo goes through the roof? What hapmens your

fund well? To be honest with you, thinking looking back at past history, we've been able to do very well when volatility spikes. So if you look at the past times when vix really went through, for example the bricks at earlier uh this year in June, we did very

very well. You look back at the first of the year when the market really took a tumble in January and was off i think from Pete Stroth over eleven and a half percent, we only went down about fifty per of that down market, and that's tipically our average. If you look at historically, we're down about of the market decline, but we're still capturing sometimes of an upside.

In March, the market was up six point seven and we're up over six per So when you have those higher lows, it definitely helps when the market comes back, you have more money there to make money for your clients. David, you also have the Summit Global Investments Small Cap Low Volatility Fund. Tell us about that. So the small cat fund. What I usually tell people in clients is a lot of times they really like the characteristics of the large

cat fund with the SMP high hundred. The small cat fund, you take everything you like about it and you just turn it into a love The small cat fund does everything, but it's more pronounced. There's a little bit more volatility there. Who were able to take advantage of that volatility a little bit more, the spreads began to be a little bit wider, and we've we've we've done very well there. We took about three years to research this before we started at about three years ago, and it's just been

a tremendous asset for clients. Just really quickly. Before I let you go, David, please tell us again the ticker symbol UH and how the performance has done not just over the past year, but since he started it. You bet so. For the large cap it's s I l v X Summit like Investments low ball x ray and then for the small cap it's small cap sc l le x Okay, David Harden fascinating. Thank you so very much for joining us. He's the President chief investment officer

at Summit Global Investments. Joining us in Salt Lake City. I'm Kathleen Hayes along with pim Fox. We thank you so much for joining us today. Keep it right here. This is Bloomberg coming off Bloomberg Laws. Brought to you by land Over Manhattan, where New York goes for luxury, conveniently located at fifty four and Eleventh Avenue. Went online at landover Manhattan dot com. Land Over Manhattan is at your service