Month-To-Date
2.56%
0.66%
One Year
1.33%
8.10%
Two Year*
9.51%
12.46%
Inception*
12.55%
13.37%
July started strong and ended weak. The S&P 500 Total Return posted a modest 0.66% return.
About the Equity Trend Model: The Equity Trend Model Portfolio is an investment model created and maintained by Adams Wealth Management. Adams Wealth Management’s Equity Trend Model is a quantitative, trend-following model portfolio that invests in up to twenty-five individual equities. Our rules-driven model takes a risk-on/risk-off approach to investing focusing on stocks that are appreciating in price as the broader market trends higher. When the broader market is trending lower, the model will invest in fixed-income ETFs (exchange-traded funds) or a basket of fixed-income ETFs. The investment objective of this model is growth and may not be suitable for all investors. For purposes of comparison, this report uses the S&P 500 Total Return Index. For more information about this model, please read our disclosures.
Month in Review: The market looked strong for most of the month, until the last week when investors started selling as a result of escalated trade wars between the U.S. and China. To further scare investors, the yield on 10-Year Treasuries fell below the yield of 30-Day Treasury Bills. This is important to understand for several reasons. First, banks and financial institutions use the 10-Year Treasury to set their own rates. Second, investors could earn a higher rate of return on the 30-Day Treasury Bill than they could on the 10-Year Treasury. This is important because it signals are broader problem with the Trump administration’s trade war with China. Recent back-and-forths between the U.S. and China have been met with market selloffs, but the fall in treasury yields resulting in the inversion of the yield curve signal a larger problem.
The model continues to have an overweighted allocation to the Information Technology sector which had mixed results for the month. Consumer Staples and Consumer Discretionary sectors looked more favorable for July. In addition, sectors with smaller allocations like Communication Services, Utilities and Industrials performed well.
It should be noted that the market rebound from December of 2018 has been erratic, volatile and choppy. As a result, the Equity Trend Model has struggled to return to the strong (out)performance it saw before the sell off at the end of last year. The models struggle to find favorable trends is very evident when you see positions like Proctor & Gamble (PG) and Nexterra Energy Inc. (NEE) being owned in the model portfolio. Proctor and Gamble and Nexterra are largely seen as defensive stocks, and yet they entered our portfolio as a result of trending higher in price. Seeing Consumer Staples and Utilities in a Trend Following Portfolio is very telling of the choppy broader market.
Ins and Outs: The Equity Trend Model did not have any turnover for the month of May.
Disclosures
This information provided is an investment model and does not reflect actual client(s) performance. This model may not be suitable for all investors. Adams Wealth Management seeks to provide investments suitable for all of our clients. As a result, many if not all of our clients will own varying allocations to this and/or other models. Clients with different objects have different results portrayed from this model.
The information provided is net of fees (1.5%). In addition, the results of this model reflect divided payments and other income from investments made.
The Standard & Poor’s 500 Total Return Index (S&P 500 Total Return) measures the total return including distributions of the Standard and Poor’s 500 Index (S&P 500). The S&P 500 is an unmanaged, market capitalization weighted index of 500 widely held stocks. The index is composed of 500 constituent companies and is often used as a benchmark for the U.S. stock market. Please note that investors cannot directly invest in an index.
All investing involves risk, including the potential for loss of principal. There is no guarantee this model will be successful.
Market Data provided by DTN IQFeed.
*Inception: 01/04/2017
*Annualized
All Data as of: 7/31/2019
