In our World Allocation Strategy we are going back to the philosophy of taking both more and less risk at the same time (Barbell risk strategy). Returns should continue to flow from liquidity and momentum factors. There is still a risk of inflation, the seeds have been sown. If inflation comes to fruition, the real return on asset classes like bonds will be extremely low and negative out past 5 years. Recent strength in our dollar could provide some global economic stimulus. And, more accommodation coming from Japan and Europe (at least the threat from the ECB) will help buoy more leveraged economies.

We currently favor currency hedged exposure to international developed economies and direct exposure to low valuation emerging markets.

World Opportunities Portfolio:

Add Risk:

  • AAXJ – Asia ex-Japan
  • DXJ – Currency Hedged Japan
  • HEDJ – Currency Hedged Europe
  • IWN – US small cap Value

Add downside Hedge:

  • Initial Purchase of VXX – Currency fluctuations increase the chance of volatility

Reduce exposure to ETF liquidity risk:

  • Reduce FLOT

As always, please feel free to contact me with any questions or concerns.

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For information on Alhambra Investment Partners’ money management services and global portfolio approach, Douglas R. Terry, CFA is reachable at: dterry@4kb.d43.myftpupload.com

Disclaimer: The information, data, analyses and opinions contained herein (1) include the confidential and proprietary information of Alhambra Investment Partners LLC, do not constitute investment advice offered by Alhambra,  are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and are not warranted to be correct, complete or accurate. Except as otherwise required by law, Alhambra shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use.