Call Us : 877.769.9980

1st Quarter 2016 Commentary

1st Quarter 2016 Commentary

 

We began the first quarter of 2016 with SignalPoint’s Market Risk Indicator (MRI) in bullish territory. As January unfolded, the markets experienced a sharp decline and SignalPoint equity strategies also declined.  However, a mere six weeks into the decline the markets shifted gears and began to recover.  Through the latter half of February and all of March, the market retraced the lost ground and the S&P 500 actually finished the quarter up nearly 1%.  Despite the sharp market moves during the quarter, our MRI remained modestly bullish at the end of March.

Federal Reserve policy remained unchanged through the first quarter of 2016.  The lack of action by the Fed was in contrast to prior Fed commentary forecasting several rate hikes during the course of 2016. The interest rate sensitivity of the components in our income portfolios was limited in response to their hands off policy. All income strategies managed to close the first quarter of 2016 with gains in excess of 3%.

As for the equity markets, the US markets fared better than international markets which were generally down.  Although the MSCI World index was off less than 1%, China was off 15%, Japan lost 12% and Europe was off close to 8%.  Looking at sector performance, healthcare was the big detractor losing about 6% and on the other end was the utility sector which was up 15%.

The volatility resulted in heightened activity for the SignalPoint Process.  There were several buy triggers in portfolios with exposure to the domestic markets and portfolios generally began to reinvest thier accumulated cash reserves. A few of the components in our income portfolios also triggered accumulation of shares. This will help the yields of those portfolios moving forward as the cash is now earning the more reasonable yields of the income components.

Overall the cash reserve levels in portfolios are now lower than any period since the 2011-2012 timeframe. The cash levels also closely correlate to the suggested level of cash as calculated by SignalPoint’s MRI. Cash reserves continue to offer a hedge against a declining market and more importantly a significant purchasing ability should the markets again correct.

We welcome feedback from our Clients. Please feel free to contact us should you have questions relative to performance, market risk and their current status.

 

Thomas M. Veale

Chief Investment Officer

SignalPoint Asset Management, LLC

SignalPoint Asset Management, LLC
Office Hours: 8:00 am—4:30 pm Monday—Friday
1201 E. Walnut Street, Springfield, MO 65802
Phone: 877.769.9980