With most equity markets continuing to rally on the back of Trump’s surprising presidential victory, each of the portfolios finished the month in positive territory. Not surprisingly, the strongest showing came from our Balanced Growth and Growth Portfolios, which each gained 0.4% on the month. The more conservative portfolios were also higher, with the Conservative Portfolio gaining a more modest 0.2%.
For a review of the portfolios’ performance, you can download our standard monthly portfolio report here. For those looking for even more detail, I am also providing additional reports generated from Morningstar which show even more detail regarding the portfolios. A summary report can be downloaded here, while the more detailed report can be downloaded here.
Despite the gains, the portfolios lagged their benchmarks, not only for the month, but for the year. The main reason for this is the conservative positioning of many of the equity funds in the portfolios.
The fixed income funds had a decent showing relative to their benchmarks, mostly outperforming. The equity side saw most of the funds underperform. The key reason was the defensive positioning, with most underweight energy, materials, and financial sectors, the sectors that have rallied sharply over the year.
Looking ahead, with valuation levels where they are, and the geopolitical uncertainty on the horizon resulting from President Trump, Brexit, and other events coming down the pipe, I continue to believe a more defensive positioning is warranted. I am willing to have portfolios that lag in a rising market, but offer better downside protection in periods of volatility. I expect 2017 to be rather volatile.
I continue to monitor the situation closely.