NorthCoast Asset Management's ETF retirement portfolios closed
September on a high note. A recovery by foreign stocks fueled
gains. Domestic holdings also enjoyed healthy advances in what
has been a banner year at home.
Here are some highlights from the portfolios for the
Big Moves Across the Pond
The Diversified Core portfolio prospered in September as its
largest position rallied 7.8%.IShares MSCI EAFE (
) was guided higher by resilient showings from Japanese and
There may be more room to run in the months ahead. "We have a
positive outlook for European stocks," said Patrick Jamin, chief
investment officer for NorthCoast. "Since Feb. 28, 2008, the
S&P Europe 350 Index is down 3%, while the S&P 500 index
is up 37%, leaving a lot of upside potential."
EFA is also the top holding of the Diversified Growth
portfolio. Jamin noted that bargain hunters have come knocking on
EFA's door. "Its upside has recently attracted some investors who
noticed more compelling valuations than in the U.S.," he said.
"The Shiller P/E is close to an all-time low vs. the U.S."
IShares Core S&P Small-Cap (
Core S&P Mid-Cap (
) resumed upward trajectories during September for Diversified
Growth. IJR and IJH appreciated 5.9% and 7.1% respectively. The
funds are up 28% and 23.4% year-to-date.
Push To Record Heights
The Tactical Growth portfolio benefited last month from the
ascent of its major positions in
iShares Core S&P 500
) and EFA. A decision by the Federal Reserve to not start
tapering asset purchases helped push the S&P 500 to hit a
record high. IVV tacked on a 5.9% gain in September and now sits
27.8% above where it began the year.
The spotlight will remain on IVV in October, as its components
get ready to announce quarterly results. NorthCoast has its focus
on more than just earnings though. "The ETF portfolios are
managed systematically according to our market outlook," Jamin
said. "We don't try to predict next quarter's earnings. Instead
we look at more than 40 relevant variables grouped in four
different dimensions to quantify our market outlook: technical,
sentiment, macroeconomic and valuation."
The gains by IVV and EFA were contagious for Tactical Growth
during September. The portfolio witnessed a 7.2% jump by
MSCI Emerging Markets (
). "Emerging markets have underperformed this year on concerns of
slower growth," Jamin said. "Even after adjusting for subdued
growth, the valuation metrics of emerging markets look reasonably
IShares International Developed Property (WPS) and
International Select Dividend (IDV) posted outsized returns for
the Tactical Income portfolio last month. Respective advances of
8% and 6.5% led Jamin and his team to rebalance. "We trimmed back
our position in IDV to keep the exposure in line with the risk
tolerance of the portfolio," he said.
Some of the profits from IDV were reinvested in the
Intermediate Credit Bond (CIU). "With an effective duration of
4.22, the risk/reward ratio is attractive enough in this
environment," Jamin said.
Shares of CIU, which yield 2.9%, saw a 0.7% uptick during the
The target weightings in all the other portfolios remained
unchanged in the month.