The ETF Portfolio Strategist: Saturday, Jan. 23

US bonds were mixed this week. While investment-grade corporates slipped, Treasuries continued to stabilize. For a second week, iShares 7-10 Treasury Bond (IEF) was up fractionally.

Is this a sign that the recent rise in yields (and the commensurate fall in bond prices) has run its course? It's too soon to say, although the bearish momentum profile for IEF remains intact, as indicated by the fund’s low MOM score in the table above. Perhaps next week, the first full week for the Biden administration and its policy agenda, will drop critical clues that will shape the bond market’s next act.

Strong Gains for Strategy Benchmarks

After a modest setback in the previous week, our four strategy benchmarks posted strong gains. The Global Beta 16 Index (G.B16) led the field with a robust 1.4% rally. G.B16, a global 60/30/10 mix of stocks, bonds, and alternative asset classes (commodities and real estate), regained all of its previous week’s loss and then some.

Notably, all the strategy benchmarks are again posting impressive year-to-date results. It’s still January, of course, and so there’s still plenty of room for doubt and debate about what lies ahead this year. But G.B16’s opening 2021 bid of 2.9% gain reminds that optimism is still alive and kicking.

Mixed Results for Managed Risk Portfolios

In contrast with strong gains for the strategy benchmarks, our managed risk portfolios struggled this week. Global Minimum Volatility (G.B16.MINV) led in this corner with a moderate 0.4% gain, although that still leaves the strategy down slightly year-to-date.

Global Managed Volatility (G.B16.MVOL) was a close second this week with a 0.3% advance, which brings the strategy to a 2.5% year-to-date increase. Note that G.B16.MVOL is again all in with a risk-on profile after the lone risk-off bucket (commodities via WisdomTree Continuous Commodity Index Fund (GCC)) flipped.

By contrast, Global Managed Drawdown (G.B16.MDD) continues to signal risk-off for nearly half of its funds. (Note: all three risk-managed portfolios use the same G.B16 opportunity set per the table above.)

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Disclosure: None.

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