Asbury Research is excited to introduce CPM Ultra, an enhancement to our widely respected Correction Protection Model (CPM). This new approach empowers Asbury clients to leverage the defensive strength of CPM while utilizing leveraged ETFs to potentially amplify returns.
Leveraged ETFs are financial instruments designed to deliver double or even triple the daily returns of a specific index or stock. This is achieved by using financial derivatives, such as futures, to apply leverage to the targeted index.
In the case of CPM Ultra, we utilize SSO — the ProShares Ultra S&P 500 — an ETF that seeks to generate 2x the daily return of the S&P 500. While this leverage can significantly boost gains on positive days, it also doubles the risk on negative days. In simple terms, a positive day for the S&P 500 means SSO gains twice as much, but a negative day results in twice the losses.
CPM Ultra combines the strategic insights of CPM with the power of leveraged ETFs, using a two-pronged approach:
Leveraged ETFs inherently carry additional risks, including larger drawdowns and increased standard deviation. However, CPM Ultra mitigates these risks by integrating the defensive principles of CPM.
Hypothetical backtesting shows that CPM provides approximately 35% smaller drawdowns and a 30% better standard deviation than the S&P 500. By allocating 50% of the portfolio to SSO, CPM Ultra maintains risk metrics closer to the S&P 500 while delivering superior returns. This structure allows clients to take on S&P 500-like risk while achieving performance that consistently outpaces the index based on hypothetical quantitative backtesting. Additionally, CPM’s signals ensure investors can sidestep extended market corrections, providing an added layer of protection.
CPM Ultra has been backtested from Q3 2017 through December 2024. Here are the highlights:
CPM Ultra Hypothetical Backtested Performance 2017-2024
While the slightly higher standard deviation reflects the amplified daily swings associated with leveraged ETFs, the model’s overall risk remains closely aligned with the S&P 500 but with much better performance.
CPM Ultra vs. S&P 500 (SPY) Since Q4 2017
CPM Ultra offers investors a unique opportunity to outperform the S&P 500 while maintaining a similar risk profile. By incorporating CPM’s proven risk management capabilities, the model allows investors to avoid significant market corrections while still aggressively capitalizing on market advances.
If you’re an investor willing to accept market-level risk, CPM Ultra provides a compelling solution to achieve both your risk tolerance and performance goals.
*Disclosure/Disclaimer: The information on this website is provided solely for informational purposes and is not intended to be an offer to sell securities or a solicitation of an offer to buy securities. The strategies employed in managing this and other model portfolios may involve algorithmic techniques such as trend analysis, relative strength, moving averages, various momentum, and related strategies. There is no assurance that these strategies and techniques will yield positive outcomes or prevent losses. Past performance as indicated from historical back-testing is hypothetical in nature and does not involve actual client portfolios, does not consider cash flows or market events, and is not predictive of future performance. The model is managed by contemporaneously recording hypothetical trades. Such trades are not live trades and are not influenced by emotional or subjective reactions to extraneous market, economic, political and related factors. The performance for such model(s) is derived from utilizing a variety of technical trading strategies and techniques. Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models utilize mathematical algorithms to attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, new data is accurately incorporated, or the software can accurately predict future market, industry, and sector performance. Asbury Research LLC does not and cannot provide any assurance that an investment in the model portfolios will yield profitable outcomes. The risk of loss trading in financial assets can be substantial, and different types of investment vehicles, including ETFs, involve varying degrees of risk. Therefore, you should carefully consider whether such trading is suitable for you in light of your financial condition. An investor’s personal goals, risk tolerance, income needs, portfolio size, asset allocation and securities preferences, income tax, and estate planning strategy should be reviewed and taken into consideration before committing to a specific investment program. Please consult with your financial advisor to discuss the appropriateness of any strategy prior to investing. All investments involve risk. Principal is subject to loss, and actual returns may be negative. Returns are not guaranteed in any way and may vary widely from year to year.
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