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RPg Market Commentary

Despite benign results for US stocks and bonds in the month of March, performance of the S&P 500 in 1Q 2017 notched its best risk-adjusted return (return/realized volatility) since 2013. Despite the march higher in risk assets, many popular “Trump trades” tired suggesting the possibility of waning investor policy optimism. We had more record highs, more growth, and more uncertainty making the theme of March – “More Everything”. Clearly the US equity market has priced in the reflation trade, but while there may not be an obvious reason for the start of a bear market, there are plenty of risks out there, including protectionism, exchange rates, high levels of corporate and consumer debt and policy uncertainty which helped spur the current momentum in risk assets… 

Benefits of Tactical

CLIENT-CENTRIC INVESTING: 
UTILIZING TACTICAL MANAGERS TO IMPROVE RISK/RETURN

Characteristics of Client Portfolios

The most common method for building multi-asset portfolios is based on Modern Portfolio Theory (MPT). The biggest issue we have with this approach is that it is not aligned with most investors’ view of risk. MPT utilizes a process that seeks an efficient portfolio with a given level of risk measured by return volatility. This misalignment manifests itself when the market is down 36%, and a portfolio is down 33%. In this case, the manager is patted on the back (receives a bonus) for outperforming their benchmark, and the investor is out 1/3 of their investment...  (click for more)

TAG Market Commentary

Buy on the expectation; sell on the reality has been the story of financial market gyrations during March. It began with a final rally blow off March 1st following bullish sentiment after President Trump’s address to Congress near the end of February. Then the S&P 500 drifted lower in anticipation of a Fed rate hike along with deepening political partisan battles. After a slight post-hike rebound, the S&P 500 was hit hard following the failure of the Obama Care repeal bill which was the first hard evidence of risk to the Trump fiscal stimulus agenda. The month ended with renewed optimism following Trump’s meetings with corporate executives and Paul Ryan stating they continue to work on a solution for health care. But, at the end of the day, March reflected doubts on Trump’s initiatives coupled with the risk of further Fed rate hikes…     (click for more)

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