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In Their Own Words: Dorsey Wright Explains Selective International Investing Through Their Systematic Relative Strength Strategy

Posted by WrapManager's Investment Policy Committee
March 13, 2018

Dorsey_Wright.pngAlthough the US is arguably the largest and most diverse economy in the world, international diversification, where appropriate, might be to able help reduce the overall risk in your portfolio by investing non-correlated assets. While diversification does not guarantee profit or protect against loss in declining markets, international investing can be an important component of a well-diversified portfolio.

Before we introduce you to the Dorsey Wright Systematic Relative Strength International strategy, which could be one way for you to invest in international and emerging markets if appropriate, we would like to clarify the concept of a Relative Strength (RS) Investment Strategy.

What is a Relative Strength Investment Strategy?

A Relative Strength strategy is a strategy that compares performance of a stock to the performance of the overall universe and is used to identify market leaders. These market leaders are the stocks that the Dorsey Wright Systematic RS (Relative Strength) International strategy seeks to own. This strategy is not constrained by style (value or growth), investment capitalization (small, mid, or large), or classification (developed markets or emerging markets). This flexibility allows the strategy to go wherever opportunities may be found in the international equity markets.

Dorsey Wright Explains their Systematic Relative (RS) International Portfolio

Andy Hyer, Dorsey Wright - Client Portfolio Manager.pngAndy Hyer, the Client Portfolio Manager at Nasdaq Dorsey Wright, graciously spoke to us about how the Dorsey Wright Systematic Relative Strength (RS) International strategy works.

Since joining Dorsey Wright in 2004, Andy has authored original research on the subject of technical analysis and speaks and writes regularly on the topic of momentum investing. He is certified with a CFP, CIMA, CFT, FINRA, and holds a B.S. from Utah State University with a dual degree in Finance and Economics. In his own words, “Markets are global and your portfolio should be too.”

Q: What makes Dorsey Wright’s Systematic Relative Strength (RS) International portfolio unique?

A: A key to the success that Dorsey Wright has with the Systematic RS International strategy over time is its flexibility – it can invest in Small, Mid, and Large Cap ADRs from Developed and Emerging Markets. With that broad investment universe, our disciplined relative strength process then allows us to drill down and find pockets of strength. Sometimes that means that we may be overweight Developed Markets and other times it means we may be overweight Emerging Markets. Our objective trend following approach often leads us to stocks that are not widely covered by fundamental analysts and we believe that this creates even more opportunities for strong performance.

Another factor that we believe has been a meaningful advantage over time is the large dispersion in this investment universe---there tends to be a large difference between the performance of the winners and the losers in the International Equity area. What you don’t own is every bit as important as what you do own and we believe that our relative strength model has done a very good job of helping us avoid many of the big losers.

Q: Dorsey Wright was founded in 1987. Can you tell us a little bit about the history of your firm, including your acquisition by Nasdaq in 2015?

A: Nasdaq Dorsey Wright is a registered investment advisory firm with offices in Richmond, Virginia and Pasadena, California. Since 1987, Dorsey Wright has been an advisor to financial professionals globally and in 2015, Dorsey Wright was acquired by Nasdaq, Inc.

Dorsey Wright’s expertise, and the cornerstone of our firm’s investment approach, is technical analysis. We use Point & Figure Charting, Relative Strength Analysis, and numerous other tools to analyze market data and deliver actionable insights. These tools cut through the clutter of day-to-day market action, identifying meaningful patterns in daily share price movements. Dorsey Wright offers comprehensive investment research and analysis through our Global Technical Research Platform and various models and indexes, which apply our expertise in Relative Strength to separately managed accounts (SMAs), mutual funds, exchange traded funds (ETFs) and other financial products.

If you are interested in learning more about Dorsey Wright, request a detailed money manager report here.

To find out if Dorsey Wright could be a beneficial addition to your investment portfolio and whether international exposure could help you achieve your financial goals, request your free, personalized Money Manager Recommendation here.



Information provided in this report is for informational and illustrative purposes only. This material is not intended to be relied on as a forecast, research or investment advice, and is not a recommendation, - or solicitation to buy or sell any securities or to adopt any investment strategy. While WrapManager, Inc. believes the information obtained from the money managers regarding their strategies is reliable, WrapManager, Inc. is not responsible for any damages or losses arising from use of this information and does not assume any liability for erroneous information provided by such companies.

Strategy descriptions listed represent a brief outline of the portfolio’s objective. There is no guarantee that any manager or product will be successful in achieving the objective described. The strategy used by the money manager listed is not suitable for all investors. This material does not represent a personalized recommendation and does not reflect individual investor’s risk and return goals nor does it serve as the receipt of, or a substitute for, personalized advice from WrapManager, Inc. or any other investment professional. Prior to selecting a money manager it is important you discuss the manager with your financial advisor. Your financial advisor can help you determine proper suitability constraints and objectives as determined from your individual needs and circumstances.

Information pertaining to WrapManager, Inc. and Money Managers’ operations, services, and fees are set forth in the respective firms’ disclosure statements, copies of which are available upon written request.

Dorsey, Wright & Associates international investing systematic relative strength strategy