Strategy PLUS Updates - April 2021

Strategy PLUS Updates - April 2021

April 19, 2021

Investors remain optimistic as the rally in global equities continues, with most indices posting all-time highs during the first quarter. Fixed income sectors, notably intermediate and long-term Treasuries, have faced the headwind of higher yields. The 10-year Treasury finished the quarter at 1.74%, after a move higher of about 80 basis points during the quarter. The movement in bond yields was primarily driven by improving growth expectations, with inflation expectations also playing a role.

Our Strategy PLUS models seek to provide an optimal blend of strategic and tactical strategies, which include active and passive management styles. On the fixed income side, we are strong advocates of using tactical and active management given today’s historic low interest rates. The reason is that passive fixed income tends to provide investors negative returns when interest rates rise, which is the environment we are currently in.

Given the increase in yields we are seeing in fixed income, as well as our expectations for continued growth going forward, we are electing to make changes in some of our Strategy PLUS models. Specifically, we are seeking to increase exposure to tactically managed fixed income strategies and reduce exposure to a strategic bond strategy.

We currently have two tactically managed fixed income strategies, each with unique goals. One is designed to provide inflation protection in a rising interest rate environment by investing in a combination of alternative assets and traditional fixed income. The other strategy seeks to provide higher yielding positions including tactical high yield models and dividend paying equities. In some models, a slight reduction was made to equity to maintain the same fixed to equity allocations within the models.

The allocation changes we are making to the models will increase exposure to inflation protected assets via natural resources, real assets, and floating rate bonds. Due to these assets having slightly more volatility than our strategic bond strategy, the Conservative models will not be included in these reallocations.

Impacted Strategies/Models

*Reductions made to maintain our existing equity to fixed income allocations.
**This model currently has a large allocation to PFG Tactical Income Strategy that we are electing to reduce to have more diversified exposure across our fixed income strategies.

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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. The information provided herein is the opinion of TPFG and may change without notice at the discretion of TPFG. Market Data is as of the time period noted and TPFG makes no warranties as to the accuracy of the information or any representations made or implied at any time given.