Logical Investment Outlook - May 2016
Our strategies continue to do well and all are positive for the year, most of them outperforming their respective benchmarks. Top performers are:
- The Leveraged Universal strategy with 13.4% return.
- The Maximum Yield strategy with 12% return.
- The World-Top-4 with 10.6% return.
- The Gold-USD with a 9.7% return.
SPY, the S&P500, ETF, has returned 1.73%, year-to-date.
Market comment:
This past month we have seen a rising bullish sentiment develop towards emerging markets and commodities. This is expected as the industry is looking at year-to-date returns of 56% for Peru, 47% for Brazil and above 20% for South Africa, Russia and Turkey. On the commodity side, the silver ETF (SLV) has returned 28% so far, GLD 20% while less known Tin and Platinum ETFs are doing even better.
If history is any guide, we’re standing at the edge of 40%–96% returns over the next two years.
Meb Faber, April 21st, post on mebfaber.com
According to Mr. Faber's research when a major asset class has more than three losing consecutive years, that asset class shows an exceptional recovery during the following two years. He argues that if history is any guide one can expect above average returns from emerging markets and commodities. This is easier said than done as one cannot predict when to enter the trade. Still, it is a positive outlook that has so far played out.
One asset class that enjoys less attention but had a superb risk adjusted performance is foreign bonds. WIP, inflation-linked bonds outside the United States , returned 9% so far while PCY, dollar denominated emerging market debt, returned almost 7%.
Our strategies have been investing in foreign bonds (PCY) and Gold (GLD) since February while Peru (EPU: +20.3% in April) was chosen by our World Top 4 strategy last month (see our April Newsletter mentioning this particular choice as a sign of emerging market recovery).
Our point of view is supportive of these markets but we would be careful going fully into E.M. with the sentiment being so bullish. Let's not forget we are entering a period (May-September) that has been historically more volatile and less bullish than average. Coming into a slower seasonal market one should look towards more conservative strategies like the Bond Rotation Strategy, the Global Sector low-volatility as well as our core Universal Investment Strategy.
Logical Invest, April 29 2016
Strategy performance overview:
| symbol | close | year to date % ▴ | 3 month % | 1 month % | 1 day % | 60 day volatility | 60 day correlation | 3 month Sharpe | 12 month Sharpe | 36 month Sharpe | LastModified: 4/30/2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| UIS-SPXL-TMF | 5715.06 | 13.43 | 12.27 | -0.81 | -0.43 | 18.21 | 0.23 | 5.83 | -0.29 | 1.75 | |
| MYRS | 630.28 | 12.04 | 4.68 | -4.53 | -0.68 | 19.67 | 0.03 | 1.55 | 0.25 | 1.11 | |
| WORLD-TOP4 | 293.45 | 10.62 | 11.97 | 4.01 | 0.40 | 13.20 | 0.36 | 6.98 | -0.11 | 2.33 | |
| GOLD-USD | 292.27 | 9.73 | 6.54 | 2.55 | 0.52 | 11.70 | -0.50 | 3.72 | 2.05 | 2.02 | |
| TLT | 129.38 | 7.93 | 2.23 | -0.74 | 0.26 | 11.92 | -0.60 | 1.11 | 0.54 | 0.50 | |
| BRS | 263.57 | 6.80 | 4.50 | 0.63 | 0.04 | 6.19 | -0.39 | 4.49 | 0.99 | 1.80 | |
| UIS | 483.18 | 4.63 | 4.32 | -0.17 | -0.15 | 6.43 | 0.24 | 4.93 | 0.25 | 1.85 | |
| BUGLEV | 279.26 | 4.19 | 4.19 | 1.90 | 0.58 | 5.97 | -0.31 | 4.23 | -0.57 | 1.01 | |
| GSRLV | 493.68 | 4.00 | 2.63 | -0.58 | 0.23 | 7.78 | -0.06 | 2.36 | -0.16 | 1.15 | |
| NASDAQ 100 | 1032.41 | 3.72 | 10.54 | 1.11 | -0.93 | 17.16 | 0.68 | 5.11 | 1.47 | 2.64 | |
| AGG | 110.89 | 3.29 | 2.03 | 0.25 | -0.01 | 2.64 | -0.37 | 4.55 | 1.09 | 0.93 | |
| BUGST | 211.91 | 1.88 | 3.17 | 1.53 | 0.53 | 5.49 | -0.34 | 3.68 | -1.09 | 1.07 | |
| SPY | 206.33 | 1.73 | 7.06 | 0.39 | -0.54 | 14.92 | 1.00 | 3.56 | 0.10 | 1.24 | |
| GMRS | 3818.06 | 1.05 | 2.35 | 0.12 | -0.15 | 13.11 | 0.36 | 1.44 | -1.09 | 0.27 |
Symbols:
BRS - Bond Rotation Strategy
BUGST - A conservative Permanent Portfolio Strategy
BUGLEV - A leveraged Permanent Portfolio Strategy
GMRS - Global Market Rotation Strategy
GMRSE - Global Market Rotation Strategy Enhanced
GSRLV - Global Sector Rotation low volatility
NASDAQ100 - Nasdaq 100 strategy
WORLD-TOP4 - The Top 4 World Country Strategy
UIS - Universal Investment Strategy
UIS-SPXL-TMF - 3x leveraged Universal Investment Strategy
AGG - iShares Core Total US Bond (4-5yr)
SPY - SPDR S&P 500 Index
TLT - iShares Barclays Long-Term Trsry (15-18yr)
Comments
