September 9, 2020
Domestic economic news in August continued to tread murky waters in terms of historically elevated unemployment numbers, lack of a fully renegotiated stimulus bill, and still-depressed consumer spending. There have been select moments of temporary relief, though, through moratoriums on evictions, the authorization of payroll tax deferrals, and extended enhanced unemployment benefits authorized through the Lost Wages Assistance (LWA)1 program administered by the Federal Emergency Management Agency (FEMA).
As we know, the market is not necessarily reflective of the overall economy and 2020’s stark disparity continued through August as stocks once again reached all time highs.
The Federal Reserve statement this month2 was very supportive of stocks as Chairman Jerome Powell stated they expect rates to remain near zero over the next 5 years. This helped stocks shrug off the Fed’s new stance on a wider inflation target surrounding the traditional 2% hard target. With the COVID stimulus increasing the money supply and rates being held near zero that money seems to be finding its way into equities as it is one of the few places to get desired returns on investment.
Tactical Growth’s allocation at the end of July was 64% U.S. Equities, 5% International Equities, 20.5% Short-term Fixed Income, 5% Precious Metals, and 5.5% Money Market. We made one change to the portfolio during August. On the 25th we sold our 10% position in U.S. 7-10 year Treasuries and put the proceeds in our money market account. Therefore, our allocation percentages are the same as above, we only changed the duration of our fixed income holdings.
Our four different asset classes [U.S. equity, International equity, U.S. fixed income, and Precious metals] and working well together. Our U.S. equity is heavily weighted to Large Cap Growth and Technology. We will continue to try to build a diversified portfolio of well-run ETFs.
For August, the Stadion Tactical Growth Fund Class I returned 5.41% versus its benchmark Morningstar Moderately Aggressive Target Risk which returned 4.07%.
To view the most recent performance for the Stadion Tactical Growth Fund, click here.
1https://www.dol.gov/newsroom/releases/eta/eta20200812-0 Published August 12, 2020; Accessed September 2, 2020
2https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm; Published August 27, 2020; Accessed September 2, 2020
The Morningstar Target Risk Index family is designed to meet the needs of investors who would like to maintain a target level of equity exposure through a portfolio diversified across equities, bonds and inflation-hedged instruments. The Morningstar Moderately Aggressive Target Risk Index seeks approximately 80% global equity exposure.
One cannot invest directly in an index.
The Report’s commentary, analysis, opinions, advice, and recommendations represent the personal and subjective view of the author and are subject to change at any time without notice.
The Lost Wages Assistance (LWA) program is authorized by Presidential Memorandum, and provides claimants in most Unemployment Insurance (UI) programs up to $400 per week additional benefits, starting with weeks of unemployment ending on or after Aug. 1, 2020, and ending Dec. 27, 2020 at the latest. LWA will be administered by states and territories through a grant agreement with the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) and with support from the Labor Department.
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