NorthCoast Asset Management flexed its defense in March as top
holdings of its
ETF retirement portfolios
fought to hold on to gains from a strong showing in February.
The S&P 500 set a new record high, undeterred by a slight
pullback following comments from the Fed. ETFs focused on Europe
held steady despite tension in Ukraine and emerging market
positions clawed their way back up the charts.
Here are highlights from the month:
On March 19, Fed Chairwoman Janet Yellen indicated the Fed
could raise interest rates in about six months after its monthly
bond buying ends.
"While the tone and its reception was a little more hawkish,
the chairwoman remarked that the policy stays unchanged," said
Patrick Jamin, chief investment officer for NorthCoast. "Our
expectation is also unchanged in that we expect interest rates to
stay low for 2014."
IShares Core S&P 500
), a top holding in three of the portfolios, overcame a negative
stock market reaction
to the comments. It then tailed off but rebounded the final two
trading days of the month. IVV ended March up 0.4%.
Hawks Circling On The Horizon
The position has been a major long-term winner for Jamin.
However, an 18.3% ascent from a year ago has the NorthCoast team
looking at reallocation options. "The stock market's performance
has been tremendous over the past few years," Jamin said. "The
environment can be described as one in which U.S. equity
valuations are neither cheap nor stretched. We have been slightly
underweighting the U.S. to redeploy the capital in more
European stocks held their ground in March amid an economic
recovery. Conditions have been favorable for holdings such as
iShares MSCI EAFE
Europe ETF (
). "Looking beyond the unpredictability linked with Russia, the
eurozone is quite attractive," Jamin said. "There is
restructuring momentum in Italy and France and the European
parliamentary elections should advance better austerity measures
and stimulative reforms."
Enticing Prospects Overseas
Also during the month, Mario Draghi, president of the European
Central Bank, revealed that the ECB is prepared to take more
policy measures if inflation falls lower than expected.
"Monetary policy is anticipated to remain loose," Jamin said.
"The weakening of the euro vs. the dollar is helping rebalance
the economic competitiveness of the eurozone."
Jamin notes a blend of factors have held back Japanese stocks.
Currency fluctuations, weak growth and the expectation of a tax
hike have worked against EFA and
MSCI Japan ETF (
Relief may be in store though. "The mid-July meeting of the
Bank of Japan is expected to deliver increasingly accommodative
policy, and inflation numbers have been more positive as of
late," he said. "These catalysts could provide further appetite
in Japanese equities, especially at these low valuation
IShares MSCI Emerging Markets ETF (
) jumped 3.9% in March. The holding may have more room to run.
"With the exception of 2008, the P/E ratio of the MSCI Emerging
Markets Index is now at the low end of its range over the past 10
years," Jamin said. "This development has warranted a tactical
overweight to the region."