Shifting Asset Class Exposure as the US Technical Backdrop Continues to Weaken | ETF-Only - 04/22/2025

Trading
Written By Joe Gauvin

Portfolio Adjustments

Conservative

  • Current stock exposure is 23.5%

  • Benchmark Stock Exposure is 30%

  • Sell: -2% Schwab US Dividend Equity ETF (SCHD), -1.5% iShares MSCI USA Value Factor ETF (VLUE), -1.5% iShares MSCI USA Momentum Factor ETF (MTUM)

  • Added to Existing Holding: +2.5% SPDR DoubleLine Total Return Tactical ETF (TOTL), +2.5% JPMorgan Core Plus Bond ETF (JCPB)

Moderate

  • Current stock exposure is 53.5%

  • Benchmark Stock Exposure is 60%

  • Sell: -2.5% iShares Core S&P Small-Cap ETF (IJR), -2.5% iShares MSCI USA Value Factor ETF (VLUE)

  • Added to Existing Holding: +2.5% SPDR DoubleLine Total Return Tactical ETF (TOTL), +2.5% JPMorgan Core Plus Bond ETF (JCPB)

Aggressive

  • Current stock exposure is 79%.

  • Benchmark Stock Exposure is 85%.

  • Sell: -3.5% iShares Core S&P Small-Cap ETF (IJR)

  • Added to Existing Holding: +3.5% Dimensional International Core Equity Market ETF (DFAI)

 

We wanted to provide you with a quick update on the recent changes within your portfolio and the rationale behind them.

The technical outlook for the U.S. equity market has weakened further, reflecting growing investor uncertainty about the health of both the economy and the market. This is illustrated in the model, where the tape component has recently entered the bearish zone, dropping the overall score from 0 to -2. A negative score increases the likelihood of downward pressure on the U.S. market, as investors become more risk averse.

Source: Ned Davis Research (NDR)

In response to this shift, the investment committee has decided to adjust asset allocations:

  • For conservative and moderate clients: We are reallocating 5% from U.S. equities to fixed income assets.

  • For aggressive clients: We are reallocating 3.5% of U.S. equity exposure to international equities, which currently present more favorable valuations and technical indicators.

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

Joe Gauvin
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Shifting Asset Class Exposure as the US Technical Backdrop Continues to Weaken | Diversified - 04/22/2025