Updates, Tips, & Finance News
Round portfolios are currently 'Risk Off.'
What Risk Off means.
We want to simplify our investment outlook for you. Round portfolios are complex and dynamic, but on a top-level, they can be boiled down to two overarching concepts: Risk Off and Risk On.
Risk Off means that the portfolios are positioned away from riskier areas when it's just not worth taking on the additional risk. Risk On means that the portfolios have repositioned to take on additional risk.
As your long term investment partner, we help navigate the markets for you, so you don't have to worry about trying to time the market.
Market update: China
China has been at the center of all the market news recently. With Phase 1 of the US-China trade deal being signed, the markets responded positively.
The more recent news that has been causing market concerns is the Coronavirus. It has weakened the Chinese Yuan after flights were suspended to and from China, and investors have flocked to safe-haven investments.
Investors have started to fear the economic impact of companies temporarily closing operations within China, which could lead to slower worldwide economic growth. The repercussions of this may be a sell-off in risk assets such as stocks and high-yield bonds. We've seen the S&P 500 turned negative for 2020 with this recent uncertainty.
There may be a silver lining, however. Epidemics are generally short-lived and do not derail long term economic growth. At Round, we are closely monitoring the markets and what fund managers are saying in response to the epidemic.
What else is going on?
- Hedge funds just sold growth stocks at the fastest pace in more than a year, as valuations haven’t been this high since the dot-com bubble in 2000.
- Britain will officially complete its move to leave the European Union today four years after voting to do so. The next step in the process is to negotiate new trade deals with the EU and the United States.
Economic scorecard
- GDP: 2019 GDP growth was 2.3%, slowest pace since 2016.
- Interest Rates: The US Federal Reserve kept rates unchanged for the second time in a row.
- Employment: The unemployment rate remains near half-century lows, and the pace of job additions remains solid.
- Consumer: With a healthy job market, rising incomes, and upbeat consumer confidence, the fundamentals supporting household spending are solid.
- Business: Business investment and exports remain weak, and manufacturing output has declined over the past year.
Portfolio positioning
While we will be releasing a deeper dive into our market outlook soon, here is a quick take for our market outlook:
-Our objective is to provide stable returns through market volatility
-Portfolios have moved up in credit quality
-Equity exposure has been reduced
Best,
-The Round Team
Disclosures:
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person. Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Forecasts or projections of investment outcomes in investment plans are estimates only, based upon numerous assumptions about future capital markets returns and economic factors. As estimates, they are imprecise and hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.
The opinions expressed by Round represent the current, good faith views of Round and are provided for limited purposes, are not definitive investment advice and should not be relied upon as such. The links provided to external sources are for informational purposes only and do not express the views of Round.
The S&P 500 Index turning negative and wiping out gains for 2020 statistic was in reference to reporter Peter Wells’ update post in the Financial Times’ live article titled, “Coronavirus latest: More deaths reported in Hubei province.” An index is unmanaged, does not reflect management or trading fees, and one cannot invest directly in an index. The Hedge funds selling growth stocks mention was in reference to the Bloomberg article “Hedge Funds Dumping Growth Stocks Ahead of Tech Megacap Earnings” by Lu Wang and Melissa Karsh. Britain leaving the European Union was in reference to the Bloomberg article titled, “Britain Leaves the European Union, But Brexit Is Far From Over” by Joe Mayes. 2019 GDP growth figures was in reference to the CNBC article titled, “Economic growth looks even weaker this quarter, with virus now a wild card.” By Patti Domm. Interest rates, employment, consumer, and business data references in the Economic Scorecard were in reference to the Federal Open Market Committee’s press release on 1/29/2020 as well as Chairman Powell’s Post Conference Opening Remarks transcript on 1/29/2020. Interest rates are in reference to the target range for the federal funds rate of 1.5% - 1.75%.