What is iCore?
iCore is a tactical allocation model created at Intrinsic Investors to track changing valuations in the stock market.
Investing is a function of value. At various stages of a market cycle, certain market segments defined either by size (large, medium, or small) or investment style (value, growth, or blend) may outperform the broad market. A challenge for investors is trying to determine which segment of the market may outperform at any given time.
Part of the problem facing investors and their advisors is that stocks don't stand still in their respective style boxes; they migrate over time. For instance, until 2004, Apple Computer was classified a mid-cap stock. It is now one of the largest corporations in America. As companies' fortunes change, so do their style classifications.
Those changing fortunes, whether a stock goes up or down in price, is primarily a function of earnings, growth rates, and the cost of capital. Investors will gravitate toward companies with the most promising prospects. Although it is possible to identify these traits with individual companies, it has always been more difficult to see the same trends in the broad market. Until now . . .
iCore is a tactical allocation model created at Intrinsic Investors to attempt to do just that. This proprietary platform tracks the "profit potential" of all investment styles and market caps on a daily basis and allocates investor funds into the market cap with the highest profit potential (or margin of safety), with a second sub-allocation by style.
iCore utilizes style and market cap specific Exchange Traded Funds (ETF's) offered through iShares related to the Russell 3000 universe of stocks. This index contains over 93% of the total market capitalization of the U.S. equity markets. iCore tracks relative value of individual stocks and whole segments of the market on a daily basis.
To avoid excessive trading, once we begin receiving a new signal for a tactical shift in portfolios, we require that the signal remains constant for a period of time before we will re-allocate client assets. Once in place, the allocations have lasted for as little as a few months to as long as a few years.