Portfolio Trade Alert: Equity, ETF, and Factor Rotation Models
This morning, our Factor Rotation model flipped from favoring mega-cap growth to large-cap value. Accordingly, we are making trades to increase the factor rotation model to 80% large-cap value and decrease it to 20% mega-cap growth. We are also adding to our AEP position in the equity model and reducing MGK from 8% to 2%, and increasing VTV from 2% to 8% in the sector model.
The SimpleVisor rotation graphic below shows that the gap between technology and utilities in relative and absolute scores is extreme and begging for a rotation. While a rotation is likely, it may be delayed by quarter-end due to the significant impact oil prices are having on bond yields and interest-rate- and economically sensitive sectors.
Nonetheless, we adhere closely to our discipline and are making changes as needed.
Equity Model Trades
- Increase AEP to 2% of the portfolio.
ETF Model Trades
- Reduce MGK to 2% of the portfolio
- Increase VTV to 8% of the portfolio
Factor Rotation Model
- See the transaction register in the Factor Rotation portfolio model for a complete list of trades. The entire portfolio was rebalanced.
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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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