Just a note on what worked and what didn’t in July, because August looks like more of the same.
Quality, large cap companies performed well; leveraged firms did not.
- Why? As economic fears resurfaced, investors preferred firms with more solid balance sheets.
Higher quality bonds outperformed lower quality bonds of similar duration (handily).
- Why? Greece, China contributed to a risk-off mindset.
Capitalization weighted funds beat equal-weighted fund with the same objective as large company stocks beat small and mid-cap stocks.
- Why? As many active funds continue to struggling versus the major indices, investors are switching to passive. Those switches reinforce index performance relative to funds whose average cap is lower – especially value funds.
Europe outperformed Asia by a considerable margin.
- Why? Greece is insignificant; China is not!
Frontier markets outperformed emerging markets.
- Why? China and Chinese exposure are currently a negative.
Currency –hedged foreign fund beat non-hedged foreign funds.
- Why? The dollar continues to be strong anticipating a rate hike this fall.
“New economy” stocks crushed “old economy” stocks.
- Why? Those who are able to create or deploy productivity enhancing products are doing well; those leveraged to the commodity cycle are hurting. The strong dollar is a big factor.
“Risk off” industries like utilities and consumer staples beat risk on industries like industrials and materials.
- Why? See first two notes on quality above.
Growth beat value by a wide margin.
- Why? Fewer firms and fewer industries are experiencing organic growth – as opposed to growth supported by balance sheet manipulation. Those firms are commanding a higher multiple.
Past performance is no assurance of future results. Trademark Financial Management, LLC (“Trademark”) is a registered investment adviser with its principal place of business in the State of Minnesota. Trademark and its representatives are in compliance with registration requirements imposed upon investment advisers by those states in which Trademark operates. Trademark may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration. This newsletter is limited to the dissemination of general information pertaining to its investment advisory/management services. Any subsequent, direct communication by Trademark with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A complete list of all recommendations will be provided if requested for the preceding period of not less than one year. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Opinions expressed are those of Trademark Financial Management and are subject to change, not guaranteed and should not be considered recommendations to buy or sell any security. For information pertaining to the registration status of Trademark please contact Trademark at (952) 358-3395 or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). For additional information about Trademark, including fees and services, send for our disclosure statement as set forth on Form ADV from us using the contact information herein or by calling 952-358-3395. Please read the disclosure statement carefully before you invest or send money.