The Target Drawdown Professional 16 is one of five portfolios in Cabana's longest-running product series – its Target Drawdown Professional Series. The objective of this portfolio is to seek a limited volatility range (“target drawdown”) of sixteen percent (16%) from peak to trough. The portfolio primarily invests in broad asset class ETFs among the five major asset classes. Allocation is weighted toward higher beta growth assets during all but the most unfavorable market conditions. It is designed to capture appreciation in growth assets, such as small cap equities, emerging markets and commodities during periods of economic expansion, while remaining resistant to severe market downturn. Aggressive investors seeking growth opportunities through significant equity exposure throughout the market cycle may find this portfolio attractive, but like all Target Drawdown Professional Portfolios, it numerically defines risk objectives and manages targeted risk parameters using inversely- and non-correlated assets. The Target Drawdown Professional Series was designed exclusively alongside a suite of custom services for professional investment advisors and their clients. In our view, all portfolios in Cabana’s Target Drawdown Professional Series provide a viable option for most long-term investors. In September 2020 and July 2021, Cabana released two families of proprietary ETFs for use within the Target Drawdown Professional Series – Target Drawdown ETFs and Target Leading Sector ETFs (“Cabana ETFs”). All Cabana ETFs are comprised of a mix of broad asset-class ETFs. By utilizing Cabana ETFs, we strive to improve the performance, cost and tax efficiency of our actively managed Professional Series.
* Maximum Drawdown figures are gross of advisory fees. Net returns and drawdown percentages are available in the charts below.
The Target Drawdown Professional 16 is rated two stars overall by Morningstar, Inc. as of September 30, 2022. This portfolio is in Morningstar’s Tactical Allocation Category, which is made up of 349 total funds.
Cabana claims compliance with the Global Investment Performance Standards (GIPS®).
The Target Drawdown Professional 16 has been performance examined consistent with GIPS® standards. The Target Drawdown Professional 16 GIPS® Composite Report can be accessed here.
#Cabana16 Target Drawdown Professional 16
Cabana numerically quantifies acceptable levels of risk by identifying a “target drawdown” percentage for each portfolio at the onset of the investment process.
Drawdown is defined as the maximum loss, or amount an investment can be expected to fall, from peak to trough during adverse market conditions.
Monthly returns are used to calculate the drawdown percentage. This method of measurement creates a new "high-water mark" each time the portfolio’s value increases, which means drawdown is determined from a portfolio’s highest value, not from an investor’s starting balance.
All portfolios in the Target Drawdown Professional Series are constructed with the primary goal of minimizing losses where possible - especially losses that exceed a portfolio’s target drawdown parameter. This investment philosophy allows clients to remain fully invested at all times, set expectations for loss, and actively participate in favorable market conditions.
Trailing returns are annualized for periods greater than one year.
This represents Cabana's most bearish scene. Holdings selected historically tend to perform well during times of excessive market drawdown. These include U.S Treasuries, gold and the U.S. dollar, among others. This scene overrides the normal operation of the first five scenes in the event of market declines beyond a predefined limit, resuming normal operation when the basic five-scene model transitions upward (to a more bullish scene) or when an upward market trend is signaled (if we are already in the most bullish scene). This scene seeks to protect against periods of unusual market conditions, including convergence of asset class correlation, unforeseen economic shock, or other black swan events. In this way, the Safety Valve is intended to complement Cabana's “target drawdown” optimization during times when excessive drawdown is threatened. When the Safety Valve is triggered, all strategies will be reallocated, and we will seek to remove beta in proportion to the drawdown of the strategy. This is "Safety Valve Level 1”. In the event CARA signals a scene change to bear market conditions while the Safety Valve is in effect, all strategies will be reallocated to seek to remove most or all beta in an effort to protect against further losses in cyclical bear market conditions. This is "Safety Valve Level 2”.
To learn more about Cabana's scenes and view up to date allocation history click here.
Target Drawdown Professional 16 Disclaimer
Cabana LLC, dba Cabana Asset Management (“Cabana”), is an investment adviser registered with the SEC. Cabana only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of Cabana by securities regulators and does not mean that such investment adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form CRS and Form ADV Part 2A, copies of which are available upon request or online at https://thecabanagroup.com/form-crs and https://thecabanagroup.com/adv-part2 or www.adviserinfo.sec.gov. This material is proprietary, and is not to be copied, reproduced, altered, deconstructed, or distributed without the express written consent of Cabana, LLC. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, accounting, or personalized investment advice. You should consult your own tax, legal, accounting, and financial advisors before engaging in any transaction.
The performance returns, benchmark comparisons, and metrics in this factsheet represent actual composite returns during a time when actual client funds were invested. Unless otherwise indicated, performance data, benchmark comparisons, asset allocation charts, drawdown, and other statistics are for illustrative purposes, calculated as of end of month, and shown gross of advisory fees but net of trading costs. Asset allocation may vary intramonth if a reallocation has occurred. Performance data is expressed in U.S. dollar currency and it includes the reinvestment of dividends and capital gains. Consistent with our ongoing third-party GIPS verification efforts, Cabana will from time to time and without notice, make minor non-material updates and corrections to performance data which do not significantly impact performance. These changes will be reflected on the most recent fact sheets and independent verification reports, as applicable. Target Drawdown is identified on a gross of advisory fees but net of trading costs basis. Net performance includes a maximum investment advisory fee of 2%. Morningstar’s Aggressive Target Risk (http://glossary.morningstar.com/InvGlossary/morningstar-target-risk-indexes.aspx) index follows an aggressive equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company. The index’s allocation follows an aggressive equity risk preference. SPY is an ETF that tracks the performance of 500 leading U.S. large cap companies. The funds in the Morningstar Tactical Allocation Category (http://im.mstar.com/im/newhomepage/Morningstar_Category_Definitions_US_June_2016.pdf) seek to provide capital appreciation and income by actively shifting allocations across investments. All indexes and categories are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/.
The Target Drawdown Professional Series invests primarily in Cabana’s proprietary ETFs (“Cabana ETFs”). Cabana serves as sub-advisor to the Cabana ETFs and is responsible for their investment strategy. The Cabana ETFs were launched in in partnership with private label ETF advisor Exchange Traded Concepts (“ETC”). Cabana receives an asset management fee for its investment advisory services related to Cabana’s ETFs. The investment strategy employed to manage the Cabana ETFs is similar to that of Cabana’s other Target Drawdown products and utilizes Cabana’s proprietary algorithm, though each product type has some material differences and performance will vary. Detailed information regarding Cabana’s ETF can be found in the offering documents, which are available at https://thecabanagroup.com/etf-prospectus/.
GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to firstname.lastname@example.org.
Past performance is no guarantee of future results. All investment strategies have different degrees of risk and the corresponding potential for profit or loss. Asset allocation and diversification will not necessarily improve returns and cannot eliminate the risk of investment losses. “Target Drawdown” is merely a descriptive term used to describe the general strategy and objective of the portfolio, it is not a guarantee, nor should it be construed to suggest safety or protection from loss. There is no guarantee that portfolio performance will remain consistent with the targeted drawdown parameter. While risk tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account and there is no guarantee that Cabana’s strategies will be suitable for any investor. Investors and advisors should not simply rely on the name of any portfolio to determine what is suitable. It is the responsibility of investment advisors to determine what is suitable for their clients. Cabana manages assets on multiple custodial platforms. Performance data, statistics, including drawdown, and asset allocation for specific investors will vary based upon differences in associated costs, inflows and outflows, custodial fees, and asset availability during the reporting period and may not be identical to reported data. All references to Cabana’s proprietary algorithm in this fact sheet refer to the most current version of the algorithm as of the date this fact sheet is published. The performance returns shown in this piece are derived from a composite of accounts that executed trades in strict accordance with Cabana investment strategies. Investors will not achieve the same performance returns if their account did not execute trades in strict conformance with Cabana’s trade signals. Prior to May 2020, this portfolio was known as Cabana’s Target Drawdown 16. Scenes assigned as per the judgment of The Cabana Group. Scene names and number of scenes have changed over time.
© 2022 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Riskalyze is an award winning, third party independent risk alignment platform. Risk Scores are proprietary to Riskalyze, modeled using actual and hypothetical information, and intended only for informational and educational purposes. More information about Riskalyze and its methodology can be found at www.riskalyze.com.