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Summary of Clearwater’s Portfolio Strategy Adjustments

Tyler Beachler May 03, 2022

Q1 2021

  • Tactically overweighted equity exposure in anticipation of effective COVID vaccinations, a surge in corporate earnings and the reopening of the U.S. economy
  • Transitioned to an unconstrained fixed income posture in anticipation of rising inflation pressure and rising interest rates (added real estate, utility stocks, EM debt, and international high yield equity)

Q2 2021

  • Swapped mortgage-backed bonds for short-term treasury inflation protected securities (TIPS) to reduce duration (interest rate sensitivity) and increase inflation protection
  • Enhanced unconstrained fixed income exposure by adding broad commodity exposure, US high yield equity, and increasing to our existing real estate position

Q3 2021

  • Rebalanced equity exposure (took profits) to top-off ultra-short duration fixed income positions
  • Reestablished cash equivalent allocation (dry powder) for future opportunities

Q4 2021

  • Tactically reestablished equity overweight in response to market volatility
  • Enhanced broad commodity exposure in response to building supply chain pressures
  • Completed a round of tax loss harvesting positions to reduce capital gains realized earlier in the year

Q1 2022

  • Swapped short duration high yield bond and utility exposure for short duration high quality bonds to reduce strategy risk profiles (high yield spreads were tight / utility valuations were stretched)
  • Exited emerging market debt exposures given war in Ukraine (eliminated foreign sovereign debt and the local currency risks)
  • Enhanced ultra-short duration fixed income to reduce strategy risk profiles (safety)
  • Reduced commodity exposure given large gains (profit taking) to enhance U.S. high yield equity
  • Opportunistically added to beaten down technology and thematic equity strategies

*The details above are representative of the asset allocation decisions as made by the Investment Policy Committee of Clearwater Capital Partners. All accounts are managed individually and, as such, actual strategy in use may vary based on a variety of conditions such as legacy holdings, size of the account, investment objective, tax sensitivity, timing of cashflows and client requested customizations. Please consult your advisor and/or your statements for specifics on your strategy.

Tyler Beachler

disclosure

THIS COMMENTARY HAS BEEN PREPARED BY CLEARWATER CAPITAL PARTNERS. THE OPINIONS VOICED IN THIS MATERIAL ARE FOR GENERAL INFORMATION ONLY AND ARE NOT INTENDED TO PROVIDE OR BE CONSTRUED AS PROVIDING LEGAL, ACCOUNTING, OR SPECIFIC INVESTMENT ADVICE OR RECOMMENDATIONS FOR ANY INDIVIDUAL. ALL ECONOMIC DATA IS DERIVED FROM PUBLIC SOURCES BELIEVED TO BE RELIABLE. TO DETERMINE WHICH INVESTMENTS MAY BE APPROPRIATE FOR YOU, PLEASE CONSULT WITH US PRIOR TO INVESTING. INVESTING INVOLVES RISK WHICH MAY INCLUDE LOSS OF PRINCIPAL.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities, insurance products, or to adopt any investment strategy. The opinions expressed are as of the date of writing and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Clearwater Capital Partners to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. S&P 500 is a registered trademark of Standard & Poor’s Financial Services, a division of S&P Global (“S&P”)  DOW JONES, DJ, DJIA and DOW JONES INDUSTRIAL AVERAGE are registered trademarks of Dow Jones Trademark Holdings (“Dow Jones”). The two main risks related to fixed-income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments.

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