What happened:

·         With August now behind us, we looked back on solid returns across all major global indexes. The leader was yet again the NASDAQ with an impressive 11% return for the month. In-line with rising equities, we also saw the 10 Year Treasury Yield increase to 0.69% from 0.53%.  While still historically low, it represented ~35% increase over the prior month.

·         We ended the month with most major indexes now out of the red for the 2020, with the NASDAQ up 33% YTD. However, we still see US Small cap, represented by the Russell 2000 index, down over 5% so far this year. This provided a stark picture between the economy at-large, compared to “big tech” and which sectors were hurt by the pandemic. 

What we did:

·         Proxy managed equity-oriented clients with a participation in the market rally, but without our foot fully on the gas pedal.  We maintained a defensive position in BND and GOVT in our equity models as we remained patient for opportunity, and looked to protect investor capital in this uncertain world.

·         As a result of our steadfast approach, there were no changes to the Core models. While we did hold a more conservative posture, we maintained some global allocations but held overweight in US equities.

What we are watching:

·         As the S&P 500 and NASDAQ continue to make all time highs, and while we understand there are few alternatives to the equity markets, with debt rates at historic lows; it can still be argued that traditional valuations have gone too far, too fast.

·         We continue to closely monitor advances in COVID-19 vaccinations, the growing social unrest and looming US presidential election, which has a global impact no doubt.

·         We remain poised to react quickly if the market does in fact correct again, while remaining consistent with our algorithmic approach in our Core models.

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