2017 Q3 Investment Report Commentary

Daintree Portfolios

A Winning Hand

This year’s story has been the strength of global stock markets. Equities have moved higher based on better than expected fundamentals including synchronized growth across most economies. Other factors—such as central banks, North Korea, hurricanes, and politics—have not been enough to disrupt an economic environment that could easily be characterized as “good but not great.” The strength of equities outside the U.S. is not surprising given the more attractive valuations in foreign markets. Other themes this year include the strength of high yield bonds, non-U.S. REITs, and gold.

Recent Portfolio Positioning Shifts

We deem U.S. equities increasingly expensive along with related asset classes (e.g., high yield bonds). As a result, we have made incremental shifts away from those investments.

Daintree portfolios are tactically underweight U.S. equities and overweight non-U.S. equities. With profits captured through high yield and REIT sales, we are adding to inflation protection– overweighting Treasury Inflation Protected Securities (TIPS), infrastructure MLPs, and short-term bonds. We believe these areas are attractively priced due to the perception that interest rates and inflation are going to be low forever. Of course, we do not know precisely what will happen in the near-term, but experience gives us confidence in buying now while valuations are attractive.

 


All information in this document is from sources believed to be reliable and is for informational and educational purposes only. It is not intended to be, and should not be construed as, advice, legal or otherwise. Daintree Advisors LLC (“Daintree”) may not have verified the information for accuracy or completeness, and Daintree assumes no liability for damages resulting from or arising out of the use of such information. You are solely responsible for evaluating the merits and risks of the use of this information. To ensure compliance with IRS requirements, we inform you that any federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this document.

 

 

Posted: February 23, 2018 | In: Investment Commentary