The DPS program operates by analyzing the price behavior of mutual funds based on the integration of various mathematical algorithms. The strategy utilizes a process to evaluate the price history of all funds available in a specific model. Typically a strategy will contain 12 to 25 funds, including a range of stock, bond, sector, and money market mutual funds. A broad spectrum of investment options increases the probability of selecting a productive investment choice over a wide range of investment and economic environments.
Therefore, the strategies will not recommend funds that have recently demonstrated negative performance. In addition to the objective analysis of price movement, each strategy seeks confirmation from the index which most closely correlates to the funds in the strategy. This confirmation from the index helps ascertain whether the price behavior of the fund is an aberration or a legitimate, sustainable trend. The strategy will then register a “buy” signal for the single fund with the highest score, based on the strategy’s proprietary ranking system. DPS portfolios typically run 6-8 strategies simultaneously.