We are pleased to see the equity allocation continues to perform well this year, particularly due to the continued outperformance of the Nasdaq-100 relative to the broad market.
Looking forward, the equity allocation is likely to remain unhedged until February 2024 unless there is a major shift in the markets.
Last month the strategy recommended rotating into short-term Treasury Bills as momentum for both high-yield and intermediate-term Treasury bonds was negative on the first of November.
The strategy now recommends rotating back into high-yield and intermediate-term Treasury bonds this month as momentum for both has turned positive.
Given all the factors, we continue to maintain that stocks can continue to rally into the end of the year as investors remain bullish on the economy and corporate share buybacks remain strong.
While we believe bonds can rally in the months to come as inflation continues to cool, the Federal Reserve believes rates may need to go higher.
There were very slight changes to the Portfolio Shield™ equity allocation for December.
Portfolio Shield™ remains positioned to take full advantage of a continued rally in stocks.
We continue to evaluate the options outlined in last month’s update for the equity allocation to move Portfolio Shield™ more toward a true monthly rotational momentum strategy.
We are in the early stages of building a new model that could be used in a rotational equity model, which I am rather excited about.
The Growth, Balanced, Income, and Conservative models added a position in HYG and IEF and removed their positions in SHY in the bond allocation for December.
Portfolio Shield™ is now positioned to take full advantage of a decline in interest rates.
As a reminder, all strategies are rebalanced on the first trading day of each month and at that time, any new monies are invested according to the model strategy you are in.
For those who want to change between strategies, changes will occur at the next rebalance.
Zero balance accounts that have had a zero balance for six months or more will be closed and where applicable, the advisory agreement terminated.
There is only a 0.3% allocation to cash in each model. Due to a misreporting between Morningstar® and the ETF providers, the Asset Allocation box on the fact sheets may show a higher cash position than is in the model.
If you have any questions or would like to change which Portfolio Shield™ strategy you are invested in, please let me know.
Thank you for your continued trust in allowing us to manage your money with Portfolio Shield™.
Steven Van Metre, CFP®