Major positions in NorthCoast Asset Management's ETF retirement portfolios turned in upbeat performances in February. Holdings with exposure to the U.S. and Canada saw gains, and fixed-income ETFs steadily gained ground. However, European focused positions struggled.
Here are highlights from the portfolios for the month:
IShares Core S&P 500 ( IVV ) remained a significant holding in February, although NorthCoast reduced its weight. "Q1 earnings were similar to what we have seen in the past, with sales not growing much and earnings growth being obtained through share buybacks and M&A activity," said Patrick Jamin, chief investment officer for NorthCoast. "With the valuation not as attractive, we have pared back the position."
After a slow start, IVV rallied back in the second half of February to end the month up about 1%. IShares Core S&P Mid-Cap ( IJH ) and iShares MSCI Canada ( EWC ) also pushed higher during the month, with respective gains of about 1% and 3%.
ETFs across the pond slid further into the red, but Jamin sees the European Central Bank (ECB) stepping up to the plate in the months ahead. "With slow growth and weak inflation in the eurozone, we expect the ECB to provide more stimulus," he said. "Our valuation metrics show that European equities are still attractive now, so we are a little overweight iShares MSCI Eurozone (EZU) at the moment."
Shares of EZU fell about 4% in February and are down 9% on the year.
Income Plays Remain Resilient
For the Tactical Income portfolio, iShares Global Infrastructure ( IGF ) has held up remarkably well in the early innings of 2016. "Because it is heavily weighted in the utilities, industrials and energy sectors, and those sectors have been gaining over the last month, IGF has appreciated," Jamin said. "Our market timing model was also telling us to be more aggressive and put more weight into equities in Tactical Income, which have some dividends associated with them. IGF was one of the highest-scoring ones."
IGF rose 0.3% in February and carries a 3.2% dividend yield.
Another consistent performer for Tactical Income has been iShares Intermediate Credit Bond ( CIU ). Jamin says that the ETF should fare better than iShares iBoxx $ High Yield Corporate Bond (HYG), which NorthCoast trimmed in February. "We believe higher-quality bonds will outperform lower-quality bonds, given current market conditions," he said.
Shares of CIU gained 0.4% during the month and are up 0.9% year-to-date.