I’m delighted to provide an update on recent market developments and the strategic enhancements we’ve implemented in your Portfolio Shield™ strategy for July. Last month, the strategy delivered robust performance, capitalizing on synchronized rallies in both equities and bonds.
In June, we shifted the equity allocation to a risk-on stance, fully deploying assets between the S&P 500 and Nasdaq-100. Both indices soared to record highs, and our strategy reaped significant gains from this upward momentum in stocks.
Despite signs of a slowing economy, several factors signal a bullish outlook for equities. A potential Federal Reserve rate cut in July, the resolution of the trade war, and the prospective passage of Trump’s tax bill are poised to drive further gains. Additionally, hedge funds’ short positions and fund managers’ available cash reserves strengthen the case for continued upward pressure on stock prices.
However, risks loom as earnings season approaches. Companies have been absorbing tariff-related costs, which could strain earnings. If these pressures prevent earnings from supporting current market valuations, the stock market may face the risk of a correction due to unsustainable multiple expansion.
To optimize long-term growth, we adjusted the strategy last month by reducing the frequency of its hedging mechanism. This change enhances the portfolio’s ability to remain allocated to equities over time while preserving its capacity to protect against market downturns.
High-yield bonds delivered strong returns last month, bolstering the bond allocation’s performance. With momentum shifting favorably, we’ve incorporated intermediate-term Treasuries into the bond allocation for July to capitalize on both declining interest rates and an expanding economy.
For July, your portfolio reflects these refinements: the equity allocation remains fully invested in the S&P 500 and Nasdaq-100, consistent with last month, while the bond allocation now includes intermediate-term Treasuries and a reduced high-yield bond position, cut by roughly half. A minimal cash allocation of 0.3% is maintained across all models.
Please note that all strategies are rebalanced on the first trading day of each month. New funds will be invested according to your selected model at that time.
To adjust your investment strategy, please notify us before the next rebalance. Accounts with a zero balance for six months or more may be closed, and advisory agreements, where applicable, terminated.
We’re here to support you. If you have questions or would like to discuss your Portfolio Shield™ strategy further, please don’t hesitate to reach out.
Additionally, please inform us of any changes to your financial situation so we can tailor our recommendations to your needs. Accurate and complete information helps us provide the most suitable investment guidance.
Thank you for entrusting us with your investments. We’re committed to managing your Portfolio Shield™ with precision and care to help you achieve your financial goals.
Best regards,
Steven Van Metre
