FormulaFolios Income Allocations are quantitatively managed portfolios of income based exchange traded funds and cash equivalents. FormulaFolio's step-by-step mechanical approach to selecting positions eliminates emotional trading and is designed to only select above average positions based on both fundamental and technical indicators. This is achieved by blending two separate and unique quantitative investment models.

The first model uses a proprietary, quantitative multi-factor model to analyze major bond market indices to determine an appropriate asset allocation of Exchange Traded Funds. These categories are; US Investment Grade Corporate, US High Yield Corporate, Intermediate Treasury Bonds, and the Aggregate of US Bonds.



A second and unique quantitative engine calculates the daily probability of US Treasury Bond rate direction and selects an appropriate Index Mutual Fund to capitalize on the statistical probability.



By blending these two models into two different allocations, we have created the Income 50 (an equal blend of the two models) and the Income 30 (70% ETF Allocation Model and 30% Treasury Index Fund Model). Each Income Allocation has the goal of increasing returns and reducing risk of bond investing when compared to the Barclay's Aggregate Bond Index.

Due to risk management processes contained within the quantitative models, the portfolio is often not fully invested when bond markets carry more risk than calculable potential reward.