PFG Strategy Update - December 2020

PFG Strategy Update - December 2020

December 11, 2020

Key Points

  • Consumers poised to accelerate spending after vaccine distribution
  • Decreased defensive holdings
  • Added cyclical consumer sectors

Economic and market conditions continue to evolve rapidly. In the short term, we are facing a resurgence in COVID-19 cases and renewed restrictions. However, we have promising news on a vaccine. The Pfizer-BioNTech vaccine has been approved for use in the United Kingdom and is currently being reviewed by the FDA for distribution in the United States. Two other vaccines with promising results are also seeking approval. An effective vaccine is a key to returning to normal business activity. The possibility of three vaccines could potentially lead to a sharp rebound in consumer activity over the next 6-12 months. The consumer is in a strong position to accelerate spending. Due to a combination of stimulus payments and reduced spending, aggregate savings is above the trend. Consumers have also used this opportunity to reduce their debt load and lower interest costs through refinancing. Unemployment is still elevated, but we believe there could be a sharp recovery once the vaccine has been distributed.

We took this opportunity to reduce exposure to our defensive holdings and increase exposure to more cyclical consumer-focused sectors such as Leisure and Retail. We expect these sectors to benefit from the bounce back in consumer activity. We also further diversified our growth and technology holdings to increase exposure to secular trends such as artificial intelligence, robotics, and DNA sequencing.

The outlook outside the U.S. looks attractive, with modest valuations currently and strong growth forecasted next year. In our global strategy, we shifted some of our U.S. exposure to a global active manager. We now have neutral weighting to U.S. equities.

We continue to monitor markets and economic data for the best opportunities while managing risk.

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Disclosure: The information provided above applies to the following investment products: PFG Balanced Strategy, PFG Equity Strategy and PFG Global Strategy, each of which is a mutual fund managed by Pacific Financial Group, LLC. (PFG), a registered investment adviser; and several Separately Managed Accounts managed by PFG’s affiliate, The Pacific Financial Group, Inc. (TPFG), a registered investment adviser. The information provided reflects the opinion of PFG and TPFG, as of the date stated, and such opinions may change without notice. Neither PFG nor TPFG makes any 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. Mutual funds are sold by Prospectus only. Investors should read the Prospectus carefully before investing. All investments contain risks to include the total loss of invested principal. Past performance is not a guarantee of future results. Diversification does not protect against the risk of loss.