Global Investment Management | Global Allocation June 2014

Global Investment Management | Global Allocation June 2014

Global Investment Management update for June 2014 – Changes to our Global Asset Allocation Strategy

Below is an update to our global asset allocation strategy and a few highlights from our global investment management research.

This investment strategy uses global relative strength and momentum to invest in a prescreened ETF universe.

For a detailed overview of the strategy, please see:  A Better Global Asset Allocation Strategy?

Global Investment Management Strategy – May 2014 Performance

Once again, Spain is outperforming the competition. The iShares MSCI Spain Index (“EWP”) continues to rise as global investors seek undervalued opportunities outside of the US.

global investment research


source: ETFreplay

Global Investment Management Research Highlights: Spain and Singapore

spain etf

After the unemployment rate in Spain peaked at around 27% last year, analysts expect it to reverse in 2014.  In addition, industrial output rose late last year for the first time in two year.

Investors have been looking for opportunities within the most beaten down stock markets in Europe as the EURO continues to stabilize.

The iShares MSCI Singapore Index (“EWS”) also provided a positive contribution to the global investment management research model in May:

singapore etf

Singapore stocks are trading near their highest levels in a year after lagging regional peers in the past. During the first quarter of 2014, Singapore’s economy grew 4.9% and is expected to have strong growth for the rest of the year.

Global Investment Management Research -Global Allocation For June 2014

Changes to last month’s global investment management research asset allocation model included the removal of the SPDR S&P 500 Index (“SPY”) as small cap and technology stocks underperformed the global markets.

However, while small caps stocks are still weak, technology stocks bounced back:

qqq bounces back

Tech heavy “QQQ” bounced back at the end of May

The rebound in technology stocks was enough to add the S&P 500 back into the model.

The model updated for June is as follows:

global asset allocation strategy

Key Highlights:

-Spain and Singapore are still in the strategy.

-“SPY” is back in the model, but “QQQ” is not.

-iShares MSCI Mexico Index Fund (“EWW”) and iShares MSCI Canada Index Fund (“EWC”) are included in the top 10 list of relative strength performers. This could be due to speculation that the US Fed may not be as aggressively tapering interest rates as previously thought.

Final Thoughts

In general, European countries are showing the strongest relative strength within the strategy. Lower than expected inflation within the Eurozone are leading some analysts to call for another possible rate cut:

It is now a very strong likelihood that the ECB will cut its key rates yet
further next week as soft inflation data and a seemingly strong euro acts to
frustrate the Council. As likely, however, measures to boost lending (ie FLS-type
moves) may also still be forthcoming, if not in June then subsequently.

Decision Economics

While, here in the US,  a poor 1st quarter GDP and continued weakness from the consumer have investors hoping the Fed will lessen its tapering of bond purchases in 2014.

Investors should keep an eye on projections vs actual results in the upcoming quarter. This will give us an idea of future moves from the Fed:

us economic projections for 2014

Thanks for reading this post on my global investment management model. Feel free to leave any comments below.


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