2nd Q 2023 Review (for Participants)
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 also just goes to show the power of the January 1st date to reset!
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.
You should rebalance back to these allocations for the beginning of the 3rd quarter.
The software will convert the Categories to the exact funds that you have available in your plan. If you do not have access to one or more of the categories, they will be assigned the nearest proxy and you can see where you over/under exposed on the “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 you allocate the money that is going into your plan with your 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, you may not have access to Long Term Bonds in your plan, and therefore you will be defaulted into an Intermediate Term fund (check the “Your fund/Proxies” page).
The exact funds and percentages for each will be determined by the model you have selected and the available investment options within your plan.
REMINDER: Future Contributions can be turned “on” or “off” for any of your plans.
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, in 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, you will also be prompted to update your balances when you login. The number does not need to be exact, and it is useful if you have to rebalance using dollar amounts and not percentages. (This is rare, but there are still a few legacy systems that require this).
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