Trade Alert – Equity Model Only
Last week, we shifted the Sector and Factor Rotation model toward growth from value. This was in response to our rotation model, which now favors growth over value. The trigger was expected, as large-cap mega-growth stocks have been among the biggest laggards this month.
The mega-cap stock’s underperformance to value over the last few weeks partially reversed its earlier-in-the-quarter outperformance. Additionally, beyond the growth-to-value rotation, likely due to institutional rebalancing, many mega-cap stocks have seen outflows as investors chase the strong momentum in semiconductor and hardware stocks.
We think there is a good likelihood that mega-cap stocks outperform value and some high-flying chip/hardware companies, as the post-quarter-end “un-rebalancing” trades work through the markets. The trades will shift our value-growth allocation from a value orientation toward a more balanced portfolio, slightly favoring growth. Our net exposure to equities will be minimally impacted.
Depending on what model you are using, the weights for the entire model are listed below, along with the actual trades for the 60/40 model.
Equity Model
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Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube
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