Decreasing Exposure to Equities | CarbonLITE - 01/28/2025
Portfolio Adjustments
Conservative
Current stock exposure is 30.5%
Benchmark Stock Exposure is 30%
Sell: -3%,Amplify Etho Climate Leadership U.S. ETF (ETHO), -5% Dodge & Cox Global Bond Fund (DODLX), and -3.5% iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB)
Added to Current Fund: +3.5% Hartford Strategic Income Fund (HSNIX) & +6% Calamos Market Neutral Income I (CMNIX)
Added to Portfolio: +2% iPath Series B Bloomberg Commodity Index Total Return ETN (DJP)
Moderate
Current Stock Exposure is 66.5%
Benchmark Stock Exposure is 60%
Sell: -3% Amplify Etho Climate Leadership U.S. ETF (ETHO), -5% Dodge & Cox Global Bond Fund (DODLX), and -2% iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB)
Added to Portfolio: +3.5% iPath Series B Bloomberg Commodity Index Total Return ETN (DJP) and +7% Hartford Strategic Income Fund (HSINX)
Aggressive
Current stock exposure is 92%.
Benchmark Stock Exposure is 85%.
Sell: -3% Amplify Etho Climate Leadership U.S. ETF (ETHO)
Added to Portfolio: +3% iPath Series B Bloomberg Commodity Index Total Return ETN (DJP)
Recent economic data suggests that the number of interest rate cuts anticipated in 2025 will be lower than the market had previously expected. As a result, there is an expectation that interest rates will remain higher for an extended period, which raises the risk of market weakness as consumers continue to bear the burden of elevated borrowing costs.
Our risk models are signaling a higher probability of market volatility, driven by weakening technical indicators. The Fab Five Composite Model (shown below), represented by the orange line, is used to evaluate market risk levels. It has recently fallen below the -1.5 threshold, a level historically associated with negative returns.
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In addition to sustained inflation and high interest rates, we are seeing a narrowing of market breadth. While broader market indices appear strong, performance is largely driven by a small group of stocks. This limited participation in the rally raises concerns about potential underlying market weakness.
In light of these considerations, the investment committee has approved a 3% reduction in equity exposure across our portfolios.
Charles Schwab sent you a trade confirmation with the exact trades we placed in your portfolio. Please let us know if you would like to review these trades or your portfolio.
-SCM Investment Committee