September 4, 2023 —
As the summer winds down and kids get ready to go back to school (and as the U.S. men and women are having great collective runs at the U.S. Open), we at QuantStreet are busy at work refining our analytics and positioning our clients’ portfolios for the month ahead. August was an active month for us, with many client conversations and several new investment mandates. In particular, we are seeing interest in our ETF model portfolio product. (If you are interested to learn more, please drop us a line at email@example.com).
On the performance side, August of 2023 was a weak month for stocks and bonds, but the substantial rally over the last two weeks has certainly helped matters. QuantStreet’s core strategy was down slightly on the month, though it generally outperformed asset allocation fund benchmarks by 50-100 basis points.
For the month ahead, across our portfolios, we are decreasing allocations to the Russell 2000 based on both model and trend signals, and increasing allocations to mid caps (stocks smaller than those in the S&P 500 but larger than the Russell 2000) and international stocks. (One of the great things about interacting with our clients is they often give us ideas we haven’t though of yet. As was the case with a client suggesting we take a look at mid caps, which for multiple reasons look attractive. Look for our upcoming piece on mid caps on QuantStreet’s Substack.) With yields having increased month-over-month, and given our view that these moves are not fundamentally justified and our model’s sanguine view of Treasuries, we are moving some of our fixed income exposure out of short-term U.S. Treasuries to longer-maturity ones, which will benefit more if yields subsequently fall.
We were active on the research front in August, publishing two pieces in Advisor Perspectives and an analysis on our Substack site (if you are not already a subscriber, please sign up!) of what is likely to happen in markets should the Fed start to ease sometime in 2024, which is the current market consensus.
- Don’t Fight the Fed: What Happens When the Fed Begins to Ease? (Substack)
- How Well Does Tax-Loss Harvesting Work? (Advisor Perspectives)
- A Framework for Deciding Whether to Annuitize (Advisor Perspectives)