U.S. equity markets finished the year strongly in December to close the fourth quarter at record highs, against the backdrop of a strengthening U.S. economy and a budget deal in Washington, and despite unfounded fears of the Fed “tapering” announcement in mid-December.
Global markets cooperated, as well, with good returns in developed markets and some pockets of strength in emerging markets, though the broad EM sector ended in negative territory during December. Fixed Income markets were relatively calm with only a modest rise in rates and a modest negative return bias during the month and quarter.
Julex maintained a “risk on” signal during December. In a trend that has persisted since June, dynamic overweights in U.S. large and small cap equities, developed international equities and energy MLPs have contributed to positive returns.
Many of the Julex Dynamic portfolios on the Covestor platform performed well in December.
For January, we continue to be “risk-on” and continue to favor U.S. large and small cap equities, international developed markets and energy master limited partnerships (MLPs).
In the Income Strategy portfolio, we have shifted to a core-satellite approach that is centered on a modest core allocation to broad bonds with the majority of exposure to multi-assets including bank loans, high yield bonds and high dividend stocks.
In the Emerging Markets portfolio, we continue to be fully invested and hold positions in selected developing countries and regions with a new allocation to Mexico.
Within the U.S. equity arena, we have maintained dynamic overweights in cyclical sectors and continued to favor new exposure to the technology sector.
DISCLAIMER: The investments discussed are held in client accounts as of December 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
