AugurMax Asset Allocation Changes 2025-12-31
Equity exposure was pushed down at the end of December as stocks were mostly up around the globe. A late month drop in the VIX coincided with the historical tendency of stocks to rise before and just after Christmas — the so-called Santa rally. Stocks outperformed the other broad asset classes especially commodities (Oil and especially NatGas plunged). As stock exposures were reduced, their 2025-12-31 level keeps them below their longer-term average. Fewer funds into Bonds marked a turn in increasing bond allocations and they are still above their long-term average weighting. The prescribed Currency exposure went positive after being five months short — a positive Currency exposure suggests the dollar will underperform foreign currencies. Commodity exposure is basically flat and more or less in line with its longer term weighting.
Equity additions were highly selective with Canada, US Large Caps, and Australia receiving allocations. Euroland, US Small Caps, and Emerging Markets were cut. The VIX exposure was unchanged and its (small) long exposure essentially represents a hedge on the US stock market. Interest sensitive US REITs were pushed down modestly and continues to represent a short.
A few Bond asset classes had big subtractions including US Investment Grade and Europe. UK Gilts were added to the most. Cash exposure moved up a tiny bit.
Within commodities, Corn was added to while Oil and NatGas were reduced.
Currency returns were up in December. The Mexican Peso, Euro, and the Aussie Dollar were added to the most as the Swiss Franc fell the most.
While domestic stock returns gained ground in December, uncertainties from the government’s ballooning deficit and AI bubble concerns persisted. Value stocks outperformed growth stocks as basic materials and financials finally rebounded. Bonds were mixed around the globe but mostly down as even though the FED cut rates again. US Treasuries underperformed US Tips hinting that we’re not out of the woods with inflation (see breakeven inflation rates). While US Large Caps are 40% above their April 2025 lows (see worst drawdowns) many investors have not participated in the rebound as concerns over budget deficits, valuations, and repercussions from geopolitical events persist. 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.
