AugurMax Asset Allocation Changes 2024-11-08
Equity exposure was pushed up considerably after stock returns in early November were buoyed by the US election outcome as well as continuing rate reductions by the FED. Stocks are again the largest broad asset class and re-allocations at 2024-11-08 brought them above their longer term average weighting. Bond exposures dipped and are somewhat less than their long-term average weighting. The prescribed Currency exposure dove and now represents a short. The negative Currency exposure suggests that the dollar will continue its rise versus foreign currencies. Commodity exposure went positive. Commodities are marginally above their longer term average weighting.
US Large and Small stocks got huge bumps in exposure — most other equity regions were cut. US Small Cap stocks were added to the most while stocks in the Australia and Canada were sliced. The VIX exposure was essentially unchanged and its negative weight indirectly implies an increase in equity exposure. Interest sensitive US REITs were cut quite a bit.
Bond exposures were raised primarily in UK Gilts and in US Investment Grade. US Ten Year Treasuries and Emerging Markets were cut the most. Cash exposure rose.
Commodities were added to Gold and Corn. No commodities were cut.
The negative Currency exposure (indirectly) implies that rates in the US will be higher versus rates in the global market in the short term. The Euro was added to the most while exposures to the Swiss Franc and the Yen were cut dramatically. The risks within the currency exposure are balanced.
Domestic Stock returns were fairly strong in early November as expectations on policy changes with the new regime in the US were perceived as bullish. Ultimately, interest-sensitive sectors like Utilities and Real Estate were spurned in favor of higher beta stocks in Utilities and Energy. Bonds were mixed but mostly down for a third month. US Tips outperformed US Treasuries hinting at further inflation fears (see breakeven inflation rates). US Large Caps are now over 70% above their October 2022 lows (see worst drawdowns) with November MTD’s gain contributing to that recovery. 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.
