AugurMax Asset Allocation Changes 2024-11-30
Equity exposure was pushed down after stock returns in November were buoyed by the US election outcome as well as continuing rate reductions by the FED. Stocks remain the largest broad asset class and re-allocations at 2024-11-30 brought them more in line with their longer term average weighting. Bond exposures rose slightly and are somewhat less than their long-term average weighting. The prescribed Currency exposure jumped and now represents a long. The positive Currency exposure suggests that the dollar will drop versus foreign currencies. Commodity exposure was cut. Commodities are marginally above their longer term average weighting.
US Small stocks were reduced considerably — most other equity regions were added to. Emerging Market Equities were also cut a fair amount while stock exposures in Australia and Japan were raised. The VIX exposure was pushed up and its positive weight indirectly implies a decrease in equity exposure. Interest sensitive US REITs were left alone.
Bond exposures were raised primarily in US Tips and in US High Yield. UK Gilts and Emerging Markets were cut the most. Cash exposure moved down marginally.
Within Commodities, NatGas was added to while Corn exposure dropped.
The positive Currency exposure (indirectly) implies that inflationary expectations in the US will be higher versus other developed markets in the short term. The GP Pound and the Japanese Yen were 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 mostly up around the globe. US Tips underperformed US Treasuries hinting at lessening inflation fears (see breakeven inflation rates). US Large Caps are now over 74% 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.
