Manager: Todd Feldman, BFI Advisors
Model: Behavioral Global Macro
For the Behavioral Global Macro model, manager Todd Feldman of BFI Advisors aims to pinpoint key inflection points within financial market cycles.
Based on a variety of critical factors, the model framework varies risky asset allocations and determines the optimal amount of cash to hold at any point in time. At the core of this investment strategy is a rigorous investment selection and asset management process which includes a unique intersection between optimization, asset allocation, and behavioral finance and is designed to both earn competitive returns and enhance capital preservation.
Feldman recently sold the SPDR Gold Trust ETF (NYSE: GLD) from the model, so we asked him if he would share his reasons. His response:
Our behavioral model suggested during the month of April to shift out of commodities such as energy and precious metals and go back into select emerging markets such as India, Turkey, Thailand, and Indonesia. Since December we were invested in energy and previous metals. Our model now suggests that the energy, commodity trade is finished for now. This does not mean energy and precious metals such as gold will fall in price. It means that there are other trades that will be more successful. Energy and precious metals have done well since our model signaled to enter these sectors. It is now signaling to move out into select emerging markets on the rise.
The model has been correct so far in exiting or decreasing exposure to energy and other commodities as they have been hit hard over the last week. As far as the select emerging markets we have not seen much price appreciation. However, this may happen for sometime and then one week they may go up by six percent.
Our model is also suggesting to decrease exposure to the US or have no exposure. We are currently positioning ourselves to be cautious going into the summer months. Our behavioral model is signaling that we are in an investment cycle where one of the summer months will be difficult. We hope to exploit that by waiting with some cash and capitalizing on a 7-10% fall in the global markets.
