I hope you and your family had an awesome Fourth of July holiday!

The stock market is off to a good first half of the year.  The NASDAQ (technology) has far outperformed.  Energy, last year’s top performer, had a good June.  However, it is still one of the worst performing asset classes of the year.

It just goes to show, what is a big winner one year, can easily be a big loser the next year.  Growing up in Chicago, I had to deal with this with our sports teams.

It just goes to show the power of the January 1st date!

Below are some of the best and worst performing asset classes for the year and the past quarter.

Top 5 best performance (YTD)[1]

1.     29.96%  -  Technology

2.     24.31%  -  Large Growth

3.     20.05%  -  Consumer Cyclical

4.     19.45%  -  Latin America Stock

5.     18.62%  -  Communications

Top 5 best performance (4 Week)[2]

1.     12.04%  -  Latin America Stock

2.     10.98%  -  Industrials

3.      9.80%  -  Consumer Cyclical

4.      9.77%  -  Equity Energy

5.      8.92%  -  Small Value

Bottom 5 worst performance (YTD)1

1.     -6.70%  -  Commodities Broad Basket

2.     -4.16%  -  Utilities

3.     -3.93%  -  Equity Energy

4.     -3.42%  -  Financial

5.     -0.51%  -  Systematic Trend

Bottom 5 worst performance (4 week)2

1.     -2.30%  -  Precious Metals

2.     -0.70%  -  Intermediate Government

3.     -0.53%  -  Inflation-Protected Bond

4.     -0.43%  -  Short Government

5.     -0.35%  -  Intermediate Core Bond

[1] Morningstar.com YTD returns through 6/30/23

[2] Morningstar.com 4 Week returns through 6/30/23

PLAN CONFIDENCE STRATEGIC MODELS: 

Below are the allocations for the Strategic Portfolios as of July 5th, 2023.  These are the same allocations that were uploaded at the beginning of the 2nd quarter.  BlackRock has not made any changes to the model allocations since March 17, 2023.

Your clients should rebalance back to these allocations for the beginning of the 3rd quarter.

The software will convert the Categories to the exact funds your clients should be using.  If your clients do not have access to one or more of the categories, they will be assigned the nearest proxy and informed on their “Your Funds/Proxies” page. 

PLAN CONFIDENCE TACTICAL MODELS:

There are no changes to the Tactical Models.  The last rebalance allocation was on April 3rd.

PLAN CONFIDENCE FUTURE CONTRIBUTIONS:

In July we are recommending that your clients allocate the money that is going into their plan with their next paycheck to the following:

·        Small Value

·        Mid-Cap Value

·        Long-Term Bond

Small and Mid-Cap Value performed well in the month of June.  Up 8.92% and 8.32% respectively.  We are betting that the year long trend to “growth” style investing will take over the “value” style of investing that dominated June.

We also assume that the trend of money moving from “safer” government and corporate bonds and into riskier bonds (like High Yield) will continue in July.  However, most of your clients will not have access to Long Term Bonds in their plans, and therefore they will be defaulted into an Intermediate Term fund.

The exact funds and percentages for each will be determined by the model they have selected and the available investment options within their plan.

REMINDER:  Future Contributions can be turned “on” or “off” for any of your clients.

Kevin’ Comments:

The past quarter we have seen Large Growth Style investments dominate the Morningstar matrix (see below).

This is a continuance of the trend for the year (see below):

We are using this trend as we pick our Future Contributions each month.  There’s an old saying, “the trend is your friend”. 

So, we are not going to fight the trend until the trend starts to deteriorate.

However, the past 4 weeks we have seen Small and Mid-Cap Value and Blend outperform their “growth” counterparts.  We will see if this continues into July and if the overall markets are starting to get more conservative. 

Since it’s the beginning of a new quarter, your clients will also be prompted to update their balances when they login.  The number does not need to be exact, and it is primarily used for any of your clients that may have to rebalance using dollar amounts and not percentages.  (This is rare, but there are still a few legacy systems that require this).   

You will start to see some more correspondence from our firm to you.  We have listened to our advisors and will be creating new and ongoing marketing pieces for you to share with your clients and prospects. 

We are also working on a new “Best Practices ERISA Fiduciary” certificate to sharpen your knowledge, allow you to better compete with advisers who are not ERISA compliant and to display digital certificate on your website, emails and LinkedIn.  This certificate program will be launched in this quarter, so stayed tuned.

I fully anticipate that the Biden administration will be launching a new ERISA Fiduciary rule this quarter.  According to everything I have been reading, it appears they will be publishing it next month. 

Rest assured, when it comes out, I will read it, digest and see how it affects anything that we are currently doing.  We will make changes, if necessary, as we always will ensure that you are ERISA compliant while using our software.  I will let you know more about this as soon as I know more.

Finally, please don’t be shy in letting me know if there are any services or features that you would like us to consider here at Plan Confidence Corp.  We appreciate your feedback and will do all we can to make advising on “held away” assets as easy and compliant as possible.

Stay confident my friends!

-Kevin T Clark, RF™

CEO & Co-Founder