I’m pleased to share an update on recent market developments and the strategic positioning of Portfolio Shield™ for March 2026.
Last month’s decision to hedge the equity allocation with short-term Treasuries proved beneficial, as both the S&P 500 and Nasdaq-100 posted modest declines.
The risks of a market correction continue to build as equity trends have shifted to the downside, warranting a more defensive hedge for the coming month. High-yield bonds also declined modestly and are showing signs of weakness amid growing concerns in the private credit sector.
In light of these risks, Portfolio Shield™ will adopt a more cautious stance in March by shifting its equity hedge from short-term to long-term Treasuries. The equity allocation will remain largely unchanged aside from this hedge adjustment. Applying a similar defensive approach, the bond allocation will transition from high-yield bonds to intermediate-term Treasuries. A minimal cash position of 0.3% will be maintained across all models.
It should be noted that regardless of market conditions, the strategy was designed to hold an equity allocation as it is not designed to time markets but to hedge downside risks.
Utilizing the latest Artificial Intelligence tools, I have been working diligently to build out the optimization engine to determine what is the optimal design for equity allocation, bond allocation, and hedging mechanism.
We tested different time windows for measuring volatility and momentum across the 2020-2025 period. Our optimization found that using a shorter volatility window with a longer return lookback provides better risk-adjusted returns. This allows the strategy to react more quickly to changing market conditions while still capturing meaningful trends.
We tested multiple approaches for when to include protective assets, from long-term Treasuries (as it is now), to gold, the dollar and even inverse-like funds, in the portfolio when it hedges. Our optimization found that the existing hedge was still the best choice but by adding gold when long-term bonds didn’t qualify, it provided better downside protection.
For the fixed income portion, we optimized how we choose between Intermediate-Term Treasury Bonds, high-yield bonds, or Short-Term Treasury Bills. We determined that a dynamic bond selection utilizing a dual momentum strategy adapts to interest rate and credit conditions better, generates higher returns and lower drawdowns.
We have started implementing these improvements.
As a reminder, all Portfolio Shield™ models are rebalanced on the first trading day of each month, and new funds received are invested according to your selected model at that time. If you wish to adjust your strategy or risk level, please contact us before the next rebalance. Accounts with a zero balance for six consecutive months may be closed, and the associated advisory agreement terminated.
We remain fully committed to your financial success. Please don’t hesitate to reach out with questions, to discuss your Portfolio Shield™ strategy, or to inform us of any changes in your financial situation or objectives so we can continue providing the most suitable guidance.
Thank you for your continued trust. We are dedicated to managing your Portfolio Shield™ with discipline and care as we work together toward your long-term financial goals.
Steven Van Metre
