Manager's Pulse: January 2023

Manager's Pulse: January 2023

January 02, 2023
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OVERVIEW:

Most major indexes finished the holiday-shortened week, and the last week of 2022, lower. Almost every sector ended the week lower, with the exception of financials (+0.8%) and energy (+0.6%). Materials (-1.1%) and consumer staples (-0.8%) underperformed most for the week. Over the course of 2022, energy (+65.7%) was, by far, the best performing sector in the S&P 500, with utilities (1.6%) being the only other sector to not suffer losses. On the other hand, communication services (-39.9%), consumer discretionary (-37.0), and technology (-28.2) underperformed most. Ultimately, the S&P 500 finished the week down -0.11% and closed the year out -18.11% lower. Fixed Income also finished the week in the red, closing out a year of losses. The Bloomberg U.S. Aggregate Bond Index finished the week -0.65% lower, and the year -13.01% lower. Global sovereign yields mostly rose last week, with the 2-Year and 10-Year U.S. Treasury yields finishing the week, and year, at 4.41% and 3.88%, respectively. These yields are well above their 2021 year-end levels of 0.73% and 1.52%, respectively.

SPOTLIGHT:

With increased interest in passive, low-cost investing, our Index PLUS models offer investors broad market exposure using lower cost, Passive holdings, which are then complemented with Tactical strategies. Working with two of the largest players in the index space, the Tactical strategies include an all-equity ESG strategy and a business-cycle sector rotation strategy, both of which remain fully invested in equities but tactically adjust allocations between various asset classes, sectors, or regions. Combining these Tactical strategies with a Passive allocation provides a twist on purely passive equity investing. We currently offer three models in the Index PLUS series that range from Moderate to Aggressive, purposely excluding Conservative and Moderate Conservative due to our belief that passive fixed income is not attractive in this low interest rate environment.

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DISCLOSURE

The information provided herein is the opinion of The Pacific Financial Group, Inc. (“TPFG”) a registered investment adviser, and may change without notice at the discretion of TPFG. Spotlight contains models managed by TPFG and represent TPFG’s opinion and evaluation of its models. All information is believed to be accurate but has not been independently verified and TPFG makes no warranties as to the accuracy of the information or any representations made or implied. The information should not be construed or interpreted as an offer or solicitation to purchase or sell a financial instrument or service. The information is for informational purposes only and should not be relied on or deemed the provision of tax, legal, accounting or investment advice. Past performance is not a guarantee future results. All investments contain risks to include the total loss of invested principal. Diversification does not protect against the risk of loss. Investors should review all offering documents and disclosures and should consult their tax, legal or financial professional before investing.

The indices are presented as broad-based measures of the equity, fixed income, and consumer markets. The indices are provided for comparative and illustrative purpose to provide a comparison of the model against the broader-based equity, fixed income, and consumer market.  The indices are not intended to reflect the investment objectives of the model as the securities held within the model will differ in market volatility, concentration, investment objectives, and diversification among others from those of the indices. The indices are not managed, and returns do not reflect the deduction of fees, expenses, transaction costs or taxes that actual client accounts are subject to. Investors cannot invest directly in an index. Returns are not annualized for periods less than1 year.

 Trailing Major Index Returns and YTD S&P Sector Returns are sourced from Morningstar Direct.

* Sourced from JPMorgan Asset Management, publicly available at https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/

 All other economic and market data sources may include, and is not limited to:

Edward Jones, publicly available at https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-marketweekly-update

Goldman Sachs, publicly available at https://www.gsam.com/content/gsam/us/en/advisors/market-insights.html

Rowe Price, publicly available at https://www.troweprice.com/personal-investing/resources/insights/global-markets-weeklyupdate.html