Updated: Dec 6, 2019
In 2Q19, we entered the quarter with relatively high overweight in Asia. During April/May we initially reduced exposure in Asia, eliminated exposure to Brazil and in US Biotechnology in order to reduce risk exposure ahead of 1Q19 earning season. Given that the trade resolution will unlikely impact 2Q, expectations running high for its resolution and based on consensus estimates on S&P500 earnings which according to Factset should decline in 1Q19, we chose to reduce risk. This is especially true in light of most global stock markets having stellar 1Q19 returns. In addition, we trimmed our position in the housing/construction sector to reflect the sector’s outperformance as well as long-term interest rates rising in reflection of recession fears waning. As markets corrected in late May, we reinitiated more exposure to Asia, particularly in China given relative valuations to the US, better growth prospects and loosening monetary policy there.
Our US exposure, we had elevated weightings in value vs growth sectors given risk reduction being undertaken across the growth models given our belief that value would outperform growth in the next 12-18 months.
Brecken Capital Advisors, LLC
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