Our PFA Investment Committee recently met to review market conditions, portfolio positioning, and the performance of our investment models.
Over the past few years, U.S. equities have delivered strong returns, and several of the positions within our models have benefited significantly from that strength. While we remain optimistic about the long-term outlook for the markets, we also believe it is important to stay disciplined and periodically protect some of the profits in our portfolios. In addition, historically, leading up to a midterm election cycle, markets have often experienced heightened volatility and weakness [1], so selling from a position of strength seems prudent.
As a result, we will be selling some of the stock positions across our investment models. In our Growth models we will be selling approximately 50% of our position in the Roundhill Magnificent Seven ETF (MAGS), and in our Conservative, Balanced and Moderate models we will be reducing positions in the Roundhill Magnificent Seven ETF (MAGS), Fidelity Small-Mid Multifactor ETF (FSMD) and iShares Core S&P Small-Cap ETF (IJR) by roughly 50% each.Overall, these adjustments reduce our risk level/stock holdings by approximately 5-8% depending on the investment model.
The proceeds from these sales will be temporarily allocated to the Schwab Value Advantage Money Fund (SNVXX), which is currently yielding approximately 3.33%. This approach allows us to lock in gains while earning a competitive yield on cash reserves as we continue to evaluate opportunities and market conditions.
As always, please feel free to reach out if you have any questions about these adjustments or would like to discuss your individual situation.
Sincerely,
Your PFA Investment Committee
[1] chaikinanalytics.com