Q2 Funding Committee Outlook: Is the e
Q2 Funding Committee Outlook: Is the early cycle section over? No, however headwinds are mounting. Start to allocate to digital property as a substitute portfolio hedge. Proceed to tilt in direction of cyclicals & worth shares, fade bonds, and hedge inflation danger.
Key Takeaways for Astoria’s Q2 Funding Committee Outlook
- Keep away from bonds just like the plague
- We persist with the pro-cyclical tilt we’ve had since June 2020 however acknowledge headwinds which are beginning to seem (larger taxes, charge hikes)
- Charge hikes are on the horizon in 2022 if the financial system prospers as everybody expects
- Huge ETF flows proceed. Wow!
- The increase in digital property is barely beginning. Their volatility is kind of massive, so measurement it accordingly in your portfolio.
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The market is beginning to worth in charge hikes…
And the yield curve continues to steepen…
Credit score spreads are extremely tight. No bargains right here in any respect.
Supply: ETFAction.com
Over 90% of S&P 500 firms are buying and selling above their 50-DMA. That is the best studying since June of final 12 months.
Supply: ETFAction.com. Information accessed on April 19, 2021.
Per Bespoke Funding Group: “Not solely are complete Retail Gross sales above their pre-COVID peak, however they’re greater than 17% above that peak simply 14 months in the past.”
Supply: Bespoke Funding Group
Developed Europe is the one low-cost cohort.
Supply: JP Morgan
Not even US worth shares are a discount anymore.
Supply: ETFAction.com. Information accessed on April 15, 2021.
The ETF increase continues!
Supply: Bloomberg, Morgan Stanley Analysis. Information as of April 2, 2021.
The chart beneath was compiled by Financial institution of America Analysis. It exhibits the efficiency of deflationary property vs. these that are inflationary.
Supply: BofA World Funding Technique, World Monetary Dara, Bloomberg; Word: Inflation property: Commodities, actual property, TIPS, EAFE, US Banks, Worth and Money; Deflation property = Govt bonds, US IG, S&P 500, US Cons. Disc, Progress and US HY.
For many of the previous decade when expertise firms elevated our productiveness and China exported deflation to the Western hemisphere, inflationary pressures have been suppressed. Therefore, deflationary property outperformed inflationary property. That’s beginning to change. Right here is why:
Astoria has been tweeting for a while (observe us @AstoriaAdvisors) that we thought commodity equities would have a comparatively good 12 months. We went so far as stating we thought commodity equities would outperform disruptive development shares on a danger adjusted foundation in 2021.
Supply: ETFAction.com. Information accessed on April 15, 2021.
Supply: Company Finance Institute
Astoria is lucky to be a contributor to main media retailers reminiscent of CNBC. Astoria’s CIO, John Davi, not too long ago appeared on CNBC to debate HY Credit score and Bitcoin. You possibly can watch the varied interviews by clicking beneath:
A part of my job as a CIO for Astoria Portfolio Advisors is to:
Supply: Federal Reserve Financial institution of St. Louis. Information accessed on April 16, 2021.
The yield on the 10-year US Treasury not too long ago touched 1.75%, its highest stage because the COVID-19 shutdown.
Do you know that the SPYD (SPDR S&P 500 Excessive Dividend ETF) is up 21.5% as of April 19, 2021?
Supply: ETFAction.com. Information accessed on April 9, 2021.
As talked about all through our report, we don’t like bonds. 10 12 months is heading in direction of 3% in our view. It is not going to be a straight line to three% however we predict it finally will get there with time. Solely extraordinarily particular buyers which have strict liabilities they should match with revenue needs to be in bonds.
Supply: ETFAction.com. Information accessed on April 16, 2021
Supply: ETFAction.com. Information accessed on April 16, 2021. Calculations primarily based on month-to-month returns between 2011-04-29 and 2021-03-31.
Supply: ETFAction.com. Information accessed on April 16, 2021.
In Astoria’s view, the brief reply is sure if you’re trying to:
Supply: Portfolio Visualizer. Information as of December 31, 2020. Backtest makes use of constituents going again in time. Previous efficiency just isn’t indicative of future outcomes. The next tickers have been changed to additional the portfolio backtest: GLDM with GLD.
Supply: Astoria Portfolio Advisors. The historic backtest is calculated from October 31, 2007 to December 31, 2020. Internet Returns incorporate 50bps annualized administration payment. The load of every inventory was rebalanced again to equal weight on a quarterly foundation. The benchmark for the Cyclicals Portfolio is 100% SPDR® S&P 500® ETF Belief (SPY).
We went on CNBC to debate Bitcoin and the potential for an ETF. Our view on digital asset is that when sized appropriately, an allocation to them will help hedge some distinctive portfolio dangers.
Supply: Twitter @AstoriaAdvisors
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