The ETF will track the S&P 500, but will exit and go into cash automatically if the market closes below its 200 day moving average for five consecutive business days. The ETF will re-enter the S&P 500 if it crosses back above the same moving average for five business days.
Below is a chart showing the ETF in action:
The chart above shows the ETF going into cash last year when the market plunged below its 200 MA, and subsequently re-entering at around the start of this year. Since the market has never traded below its 200ma for five consecutive business days, the ETF has simply matched the performance of the S&P 500 this year.
What I find noteworthy is that this very simple strategy has outperformed buying holding for the last 3, 5 and 10 years, and also has outperformed when backtested from 1954 - all with significantly reduced volatility (source).
Here is an historical chart of this strategy versus buy and hold going back to 1991:
Notice, for example, how this strategy went into cash during the 2008 stock market meltdown, so that when the markets eventually did recover, the ETF was able to participate in the rally with much more cash than buy and holders.
To be sure, I am of the opinion that there are better systems than this, but I think this product is a good start and certainly much better than buying and holding.
