The Flow Whisperer – TAARSS says prefer International DM such as Europe and Japan. Tactical Asset Allocation Relative Strength Signal (TAARSS) Monthly Update
Top recommendations for March: European equities and Germany with currency hedge, Japan, US Aerospace & Defense, and Indian equities.
Market review
Risky assets received a boost in February with Global equities (ACWI) and Commodities (DBC) rising 5.5% and 4.4%, respectively. While US bonds (AGG) lagged behind losing 0.9% on rising rates concerns.
TAARSS rotation strategy monthly performance review
Last month, monthly TAARSS strategies outperformed or were in line with their benchmarks; while quarterly rotation strategies have been mixed QTD.
Tactical positioning for March 2015 based on TAARSS
Within equities we see strong investment demand support in DM Intl, and neutral support for the US, and EM for March. Within regions prefer Europe (with FX hedge) followed in the distance by Asia Pacific, remain neutral North America, and away from Latin America. Within the US, we again prefer Small and Mid Caps over Large Caps for March, or a total market or equal weighting approach. In terms of sectors, flows suggest a rotation into Global Cyclicals (Materials, Energy) away from Domestic Cyclicals, while maintaining some Defensives (Cons. Staples, Health Care) exposures. In International DM countries we see increased investor confidence, prefer Germany (with FX hedge) or Japan. For EM equities we continue to see India with the strongest support. Among other equity themes we see good support for US Aerospace & Defense. In fixed income, signals suggest credit over rates via US Corporate Debt (HY and IG). Lastly for commodities, we continue to see some support to Energy, but remain cautious.
