Reducing Equity Exposure Due to a Deteriorating Trend Signal | Diversified - 04/08/2025
Portfolio Adjustments
Moderate
Current stock exposure is 58.5%
Benchmark Stock Exposure is 60%
Sell: -2.5% iShares MSCI China ETF (MCHI) and -2.5% VanEck Gold Miners ETF (GDX)
Added to Existing Holding: +5% Schwab Short-Term U.S. Treasury ETF (SCHO)
Aggressive
Current stock exposure is 79%.
Benchmark Stock Exposure is 85%.
Sell: -2.5% iShares MSCI China ETF (MCHI), -2.5% VanEck Gold Miners ETF (GDX), -2.5% Vanguard FTSE Europe ETF (VGK), and -2.5% iShares MSCI EAFE Small-Cap ETF (SCZ)
Added to Existing Holding: +10% Schwab Short-Term U.S. Treasury ETF (SCHO)
We wanted to provide you with a quick update on the recent changes within your portfolio and the rationale behind them.
As part of our active portfolio management approach, the SCM Investment Committee uses an internal relative strength model designed to identify trends across global asset classes. This model evaluates a wide range of securities over multiple time periods to pinpoint the strongest-performing investments in sustained uptrends.
Recently, global equities—as represented by the ETF ACWI—experienced a significant downturn following President Trump’s tariff announcement. This triggered our risk protocol, which is built specifically to respond to defined downtrends in the market. When activated, the strategy aims to reduce downside exposure and preserve capital by shifting away from higher-risk positions.
In alignment with this signal, we liquidated equity assets in the relative strength strategy and reallocated to short-term bonds. This adjustment allows us to ride out current volatility while staying responsive to shifting market conditions.
As soon as the relative strength indicators confirm a new uptrend, we will reintroduce equity exposure to stay aligned with prevailing data and opportunity.
You’ll receive a trade confirmation from Charles Schwab reflecting these transactions. If you’d like to walk through these trades or discuss the positioning in more detail, we are happy to schedule a time to talk.
We’re here to help you stay grounded, informed, and positioned for the long-term—even when the market isn’t making it easy.
Warm Regards,
SCM Investment Committee