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Henry Ma, CFA
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Dr. Henry Ma, CFA, is the President and Chief Investment Officer of Julex Capital Management, a quantitative investment firm specializing tactical asset allocation strategies using a unique adaptive investment approach. The firm offers a variety of tactical/unconstrained strategies aiming to... More
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Julex capital management, llc
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All Season Investing
  • Weekly Economic And Performance Summary: Multi Asset Investment Strategies 04-01-2012 0 comments
    Apr 2, 2012 12:37 AM

    Top Stories Last Week

    • Global equity markets netted one of their biggest first-quarter rise in a decade

    Global equity markets finished one of the best quarters in a decade. S&P 500 index rallied by 12.7%, while MSCI EAFE and Emerging market indices were up by 10.8% and 13.8%, respectively. Market volatility dropped significantly. The U.S. economy finally got a decent footing. Greek orderly default relieved concerns on the contagion of European debt crisis. Chinese economy showed further signs of slowdown, but no sign of hard landing. Going into the second quarter, the questions will remain the same: how sustainable the US growth will be? How other European countries like Italy, Spain and Portugal handle their debts and fiscal deficits? How slow the Chinese economy will become? Any news related to these questions will drive the market performance.

    (Click to enlarge)

    • Bernanke: the improvement in the labor market may not sustainable

    Fed Chairman Ben Bernanke said in a speech to the National Association for Business Economics that improvement in the labor market might not be able to be sustained, "We cannot yet be sure that the recent pace of improvement in the labor market will be sustained," said Bernanke. "There are a lot of things happening in the labor market we don't fully understand." Investors saw the speech as indication of further monetary easing or continuation of current ultra-easy policy.

    • Euro-zone increased the rescue funds

    Euro-zone finance ministers agreed to raise the lending capacity of the region's rescue funds to 700 billion euros ($934 billion) from €500 billion in an effort to boost the firewall for containing European sovereign debt crisis. Financial markets reacted positively to the announcement on Friday. Italian and Spanish bond yield came down slightly.

    • US consumer confidence close to one-year high

    An improving job market and stock market gains helped keep consumer confidence close to the highest level in a year in March as more Americans said they planned to buy cars, homes and appliances. The Conference Board's consumer confidence index was 70.2 this month, in line with expectation.

    • Japanese industrial production dropped by 1.2%

    Japanese government released data showing Japan's industrial production fell a worse-than-expected 1.2 percent, the first decline in three month on Friday. Asian stock markets drifted lower after the announcement.

    • German IFO business confidence survey

    The Munich-based Ifo institute said today German business climate index, based on a survey of 7,000 executives, rose to 109.8 from a revised 109.7 in February, an eight-month high, suggesting Europe's largest economy will return to growth. Germany's benchmark DAX share index has rallied by 18% in the first quarter.

    Top Stories to Watch This Week

    • US nonfarm payroll and unemployment rate

    US economy is expected to add 211K jobs in March and unemployment rate to stay at 8.3%.

    • Global PMI manufacturing data

    PMI manufacturing index will released in several countries. Look for signs of Chinese economic slowdown and European contraction.

    China: Official PMI number is expected to be 50.5.

    Euro-zone: 47.7

    United Kingdom: 50.7

    US: 53.5

    • ECB, BOE, RBA meetings

    European Central Bank, Bank of England and Reserve Bank of Australia will meet and are expected to keep interest rates on hold at 1%, 0.5% and 4.25%, respectively.

    Weekly Performance Summary

    All the portfolios except the Defensive Portfolio declined slightly as results of negative performance of EFA, VWO, AMJ, and GSG during the week.

    Table 1: ETF Performance

    Asset Class Return     Last Week Return MTD Return YTD Return
      SPY US Large Cap 0.36% 3.22% 12.69%
      IWM US Small Cap 0.07% 2.49% 12.64%
      EFA Developed Market Equity -1.12% 0.42% 10.82%
      VWO Emerging Market Equity -2.20% -2.60% 13.77%
    Dividend Assets          
      IYR US REIT 1.04% 4.50% 10.62%
      AMJ US Energy Master Trust -1.44% -4.07% 1.58%
      GLD Gold 0.51% -1.32% 6.66%
      GSG Commodity -3.39% -3.04% 5.46%
      HYG US High Yield 0.25% -0.95% 2.61%
      AGG US Bond 0.52% -0.57% 0.14%
      TIP US Treasury Inflation Indexed Bond 0.04% -0.86% 0.82%
      IEF US Treasury Bond 0.62% -1.59% -1.83%
      TLT US Long Term Treasury Bond 0.69% -4.23% -7.03%
      SHY US Short Term Bond 0.05% -0.07% -0.13%

    Table 2: Weekly Portfolio Performance

    Portfolio Solutions WTD MTD
    (1 day delay)
    (1 day delay)
    (as of 12/11)
    (as of 12/11)
    (as of 12/11)
    Aggressive -0.6% 0.1% 8.4% 12.4% 16.4% 16.1%
    Moderate -0.5% -0.1% 6.7% 12.4% 14.8% 14.4%
    Conservative -0.3% -0.4% 4.7% 12.5% 13.7% 12.8%
    Defensive 0.0% -0.6% 2.9% 13.2% 12.5% 11.1%
    Concentrated Portfolio -0.2% 0.2% 6.1% 12.1% 19.1% 19.3%
    S&P 500 Index 0.4% 3.2% 12.7% 2.0% -0.3% 2.9%
    Barclays Bond Index 0.5% -0.6% 0.1% 10.3% 6.9% 5.8%
    CPI Inflation       3.2% 2.3% 2.5%

    For more information about the multi-asset investment strategies, please visit allseasoninvesting.com.

    About ALL SEASON INVESTING: All Seasin Investing (ASI) is an investment blog, created in December 2011 to offer investors insights and researches on how to implement a dynamic multi asset allocation strategy with the low-cost index funds or ETFs to achieve consistent returns while limiting downside risks through all stages of a market cycle.

    Disclosure: I am long SPY, IWM, EFA, VWO, IYR, AMJ, GLD, GSG, HYG, JNK, AGG, TIP, IEF, TLT, VNQ.

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