SUMMARY. Over the past 2 weeks we began readjusting risk lower as a result of many of our holdings fully reflecting the reopening of the economy. We started this week with cash levels approaching 25% across our growth models and lesser amounts in our income models. In addition, we put on hedges that would benefit if market fell to protect performance. Our decision was also rooted in the rioting and the risk it would lead to higher covid-19 cases. By mid-week those risks began to get reflected in the valuations leading to substantial correction.
INVESTMENT IMPACT. By weeks end as markets corrected, we once again reduced cash levels leaving some buffer in our growth portfolios to deploy. Income models remain slightly over-weight equities. Our model portfolios are weighted towards those companies who's valuations (in our view) have been slow to reflect the reopening of the economy. Our view is grounded on valuing holdings based on pre-covid earnings power which we believe will return as covid-19 fears subside going into 2021. Further, we shifted some assets overseas in markets that we believe are depressed such as Brazil where Covid-19 cases are ramping still and markets that remain at depressed valuations relative to the US. Cash levels remain somewhat elevated across our growth models.
Our model portfolio performance has been updated on our website as of 5/29/20.
For more insights see our website and disclosures found there at BCA. As always contact us for further explanation of how these events can affect your finances. To unsubscribe from our newsletters & website please email us with "unsubscribe" in the subject.