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The Q.ai Team

About the U.S. Outperformance Kit

About the U.S. Outperformance Kit

ICYMI: U.S. stocks have been beaten down. But, ironically, the country boasts a stronger economic outlook—and is less impacted by some of 2022’s ruthless developments (including the war on Ukraine)—than other developed countries.

That tells us that something isn’t right here. And we’re anticipating relative upside in U.S. equities that you can capture thanks to our latest Kit: the U.S. Outperformance Kit.

Now, you can capitalize on the expected upside in U.S. equities, versus developed international markets, with this low-risk investment.

Here’s how it works.

Capitalize on higher upside in U.S. equities with the U.S. Outperformance Kit

The U.S. Outperformance Kit takes a long-short approach to help you benefit from a current divergence in value between U.S. and international equities, despite a more favorable outlook for the U.S. economy. The pair trade is positioned to capitalize on a convergence in their relative value.

Year to date, the Russell 1000 is down over 14.5% (as of May 31, 2022). Meanwhile, the U.K. stock market is up over 2.9%, Germany and France are down less than 9.5%, and Japan is down 4.7%.

Although energy prices are high domestically, Europe was in a worse position, even before Russia’s invasion of Ukraine and subsequent sanctions. That’s why this Kit takes a hedged position with a long-short approach. It creates a pair trade that’s rebalanced weekly to capture the expected outperformance of U.S. stocks to those in other developed markets.

Long U.S. equities and short the MSCI EAFE Index


The U.S. Outperformance Kit is long U.S. equities via iShares Russell 1000 ETF, and it shorts the MSCI EAFE Index by investing in the inverse ETF, ProShares Short MSCI EAFE.

The Russell 1000 is a broader index than the S&P 500 as it includes additional companies of smaller size, and this somewhat dilutes the overall impact of the largest U.S. companies. However, the top stocks should be relatively familiar. These include Apple, Microsoft, Alphabet, Amazon, Tesla and more.

Meanwhile, the EAFE index is dominated by Western Europe, which makes up 65.3% of the index, and three APAC countries (Japan, Hong Kong and Australia), which make up 32.3% of it.

Benefit from the undervaluing of U.S. equities

Through this Kit, you can benefit from Q.ai’s view that U.S. equities are relatively undervalued, especially compared to other developed countries’ equity markets.

Sure, the overall market could trend down further, but if we’re right about U.S. outperformance, you’ll still generate a positive overall return from this Investment Kit. And, if markets recover, we expect domestic equities to outperform in the short and medium term, also creating value for you.

Bottom line

Because the U.S. Outperformance Kit is one of our specialized pair trades, we’re even offering it to you as a smaller minimum investment. The low investment minimum of the Kit is only $25, making it more affordable and easy to diversify your portfolio.

This kind of Kit would be productized by major hedge funds for high-net-worth investors, but Q.ai makes it easy for everyone.

Add the U.S. Outperformance Kit to your investment portfolio in Q.ai.

Disclosures
Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.

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