Key Points
- Cyclical recovery remains on course.
- Increase tactical managers shifting to cyclical strength.
- Decrease tactical manager with a defensive mandate.
The MMS Models are built utilizing the Market Movement Solutions philosophy. We believe that an effectively diversified portfolio should be built around three distinct mandates, with each mandate having a unique objective, expectation, and contribution to the portfolio. These mandates include Strategic, Tactical, and Diversifier. Through the combination of mandates, we believe a client can experience greater diversification, improved risk management, and enhanced returns.
The economy continues to progress towards a full reopening, helped by growing vaccination rates and a supportive policy environment. The number of states reporting 70% vaccination rates continues to expand each week. Pent-up demand and an improving employment picture should lead to strong growth in 2021. The Federal Reserve has indicated they are looking for significant progress toward full employment before considering raising interest rates. Fiscal policy remains focused on supporting the recovery, with discussions are ongoing for an infrastructure spending package.
Considering trends in the economy, we made some changes to the Tactical mandate in two of the models. We want to put a greater emphasis on tactical holdings that can overweight more cyclical sectors. Cyclical sectors typically lead in the early phase of a recovery. Funding for the shift came from a tactical manager who specializes in defensive positioning, which is more advantageous later in the business cycle. Here are the details of the changes:
MMS Aggressive
- Increase FPA Crescent and AAMA Equity
- Decrease Toews Tactical Defensive Alpha
MMS Moderate Growth
- Increase FPA Crescent and Janus Henderson Balanced
- Decreased Toews Tactical Defensive Alpha
Overall, we believe this strengthens the risk/return profile for these models.
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Disclosure: Advisory services provided by The Pacific Financial Group, Inc. (“TPFG”) a Registered Investment Adviser. 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. 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.