Investment Insights: 1st Quarter, 2015 in review
By Mike Jones, posted April 23rd, 2015
Spring usually brings with it milder weather and (lately) milder reallocations to our investment models.
I've noticed over the last several years that the 2nd quarter reallocations produced by my statistical and technical analysis yields minor adjustments. This year that "mild spring" trend continues.
Though I would not want to become complacent, there has been a markedly consistent pattern since the financial crisis of 2008 - 2009. Stocks perform well into the end of the calendar year and hang on to or make further gains during the first quarter of the subsequent year. As a result that which was producing results continues to screen very highly on the statistical rankings which I perform. The winners keep on winning.
Here are the second quarter investment themes represented in our portfolios.
On the equity/stock front there continues to be a higher allocation to both international and emerging markets than normal. This continues a trend of attractive valuations relative to domestic equities. Most of our dynamic portfolios will see an allocation to the Artisan International Fund as well as the Federated International Leaders Fund. Currently these investments have added attractive returns to the portfolios year to date. In addition to these funds we have allocations to large cap and mid - US equity funds. Fundamentally these allocations seem reasonable to me as valuations are more reasonable globally.
With respect to fixed income/bond investments, challenges abound. With central banks around the world continuing their path to easy money, interest rates are very low, and in some places, even lower than zero. Last week investment history was made. For the first time ever the financial markets produced a negative interest-rate on a 10 year government bond. On April 7th, Switzerland sold 10 year bonds that investors are actually paying to hold. That's right, negative return for 10 years. Fortunately, there are places where a modest interest rate can be obtained. Currently we are invested in corporate debt, emerging market bonds, and adjustable rate Bank loans. The mutual funds which represent these areas include Federated High Income Fund, PIMCO Emerging Bond Fund, and T Rowe Price Adjustable Floating Rate Fund.
Mike Jones is Managing Director / Investing Group of Argent Advisors, Inc. Email him at firstname.lastname@example.org. Write to him at 500 East Reynolds Drive, Ruston, LA 71270 or call him at (318) 251-5844. The opinions of any single advisor do not necessarily reflect the opinions of Argent Advisors, Inc. No forecasts can be guaranteed. Argent Advisors, Inc. does not offer tax, insurance or legal advice. The information contained in this column should not be construed as a substitute for personalized investment, tax, insurance or legal advice.