AugurMax Asset Allocation Changes 2025-05-31
Equity exposure was lowered at the end of May as stocks continued to rally off their April 8th lows and the threat to the global economy from tariff wars seemed to subside. During the month, stock moves were marked by subdued volatility as it steadily rose. Stocks outperformed the other broad asset classes especially bonds. Stock exposures were brought down somewhat and re-allocations at 2025-05-31 brought them below their longer term average weighting. Bond exposures were essentially unchanged and are more or less in line with their long-term average weighting. The prescribed Currency exposure jumped and now represents a fairly large overweight. This positive Currency exposure suggests the dollar will continue to underperform foreign currencies. Commodity exposure remains negative.
Equity additions were highly selective with US Large Caps, UK, and Australia getting the most. The VIX exposure moved up slightly and as it is now a long represents an inverse US stock market bet. Interest sensitive US REITs were cut back a bit.
Bond exposures were raised in a few bond asset classes with big additions to US High Yield, US Investment Grade, and Emerging Markets. UK Gilts were cut the most. Cash exposure was essentially unchanged.
Within commodities, Gold and Oil were defunded while NatGas moved up marginally.
Currency returns were up across the board in May. A lower dollar makes foreign goods more expensive so for the US consumer, any price increases from new tariffs will be exacerbated by a lower dollar. Most currency exposures were raised with the Yen, Swiss Franc, and the Canadian dollar moving up the most.
While domestic stock returns gained ground big time in May, uncertainties loomed over markets from the Trump regime’s policy actions/threats. Growth stocks continued to beat value stocks, as key tech bellwethers reported robust earnings. Bonds were mixed around the globe as some inflation measures abated but concerns about global growth continued. US Tips beat US Treasuries hinting at higher inflation fears (see breakeven inflation rates). While US Large Caps are more than 72% above their October 2022 lows (see worst drawdowns) a fresh drawdown (troughing 2025-04-08) was added to the list due to the repercussions from US tariff threats and possible retaliations. The prescribed changes are largely influenced by our ECO methodology. Performance results (on a stand-alone basis) for assets like Gold and others using our ECO metrics are shown here.
