Commentary

Not to jinx it but…March saw a second consecutive “calm” month. News, events, volatility and even trading volume was tamer.

Performance among asset classes was consistent throughout the first quarter. Equities were higher with small stocks leading the way, bonds were negative in each of the three months and commodities (with the notable exception of Gold) continued rebounding.

The biggest themes since the end of the year have been the rise in interest rates which explains the negative bond returns and the rotation from large cap tech stocks to small cap, cyclical, and “value” stocks. These latter companies and their stocks could not keep up last year but will experience outsized growth during the economic reopenings.

So where do we go from here? The markets still have strong tailwinds including the loosening of pandemic restrictions, continued easy money policies by the Fed and a potentially huge infrastructure spending plan from the government. This is on top of the continuing new job creation, increasing retail sales figures and high level of optimism in the manufacturing sector. But momentum on Wall Street appears to be slowing, valuations are well above historical norms, corporate tax rates may be lifted and a spike in inflation may accompany this huge wave of pent of consumer demand.

There are always positives and negatives. After weighing those, investors that are pessimistic are called “bears” and feel the markets will fall while the optimists are called “bulls” and see the markets headed higher. People that constantly swing between the two and make numerous adjustments to their holdings can be labelled “traders.” Unfortunately, many traders are short-term oriented, let emotion and/or bias overly sway their decisions and wind up trying to predict the unknowable. As seasoned investors we know that the markets “Climb a wall of worry” and remain mindful of overreacting to every piece of news and instead focus on our clients’ long-term goals.

Risk Numbers

The Risk Number is at the heart of a sophisticated set of tools to precisely measure the appetite and capacity for risk that each client has, and demonstrate their alignment with the portfolios built for them. The following graphic shows the risk of various asset classes as measured on a scale of 1-99 (1 being the most conservative and 99 being the most aggressive) as of the date above.

Centric's Approach

We start with a Risk Number, a measurable way to pinpoint how much risk you want, need, and already have. Then, your wealth advisor will optimally allocate our investments to help you reach your financial goals. Along the way, you will receive transparency of information, seamless proactive service and the trust and accountability you need to stay on track. All of this will lead to your personal comprehensive investment strategy that is powerful, disciplined, responsive. 

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Centric’s Market Assumption Disclosures: This information is not intended as a recommendation to invest in any particular asset class or strategy or product or as a promise of future performance. Note that these asset class assumptions are passive, and do not consider the impact of active management. All estimates in this document are in US dollar terms unless noted otherwise. Given the complex risk-reward trade-offs involved, we advise clients to rely on their own judgment as well as quantitative optimization approaches in setting strategic allocations to all the asset classes and strategies. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. If the reader chooses to rely on the information, it is at its own risk. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal, or tax advice. The outputs of the assumptions are provided for illustration purposes only and are subject to significant limitations. “Expected” return estimates are subject to uncertainty and error. Expected returns for each asset class can be conditional on economic scenarios; in the event a particular scenario comes to pass, actual returns could be significantly higher or lower than forecasted. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making an investment decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact future returns. Asset allocation/diversification does not guarantee investment returns and does not eliminate the risk of loss.

Index Disclosures: Index returns are for illustrative purposes only and do not represent any actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

Riskalyze Disclosure: The Risk Number^® is a proprietary scaled index developed by Riskalyze to reflect risk for both advisors and their clients. The Risk Number is at the heart of a sophisticated set of tools to precisely measure the appetite and capacity for risk that each client has, and demonstrate their alignment with the portfolios built for them.

Shaped like a speed limit sign, the Risk Number gives advisors and investors a common language to use when setting expectations, recognizing risk and making portfolio selections. Just like driving faster increases hazards, a higher Risk Number equates with higher levels of risk.

General disclosure:  This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks.