The sector allocation strategy’s message is mixed with overweights to Value sectors like Energy and Financials, as well as Growth sectors like Technology and Communications Services. Industrials, Consumer Discretionary, and Health Care are at underweight. The sector model uses sector-specific indicators to determine opportunities and identify risks in an objective, weight-of-the-evidence approach.

The Day Hagan/Ned Davis Research Smart Sector® for Global Balanced Portfolios was recorded on March 29, 2023.

The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model improved in March and remained with a fully invested equity allocation recommendation.

With yields across the board rising in February, fixed income sectors suffered. Floating Rate Notes and International Investment Grade improved to overweight, while U.S. Investment Grade Corporate bonds dropped to underweight. Additionally, a rising U.S. dollar led to Emerging Market bond underperformance and an underweight allocation.

The sector allocation strategy continues to be positioned in early-cycle areas of the market. Value sectors like Energy, Materials, and Financials remain overweight, and Consumer Discretionary rose to a slight overweight allocation. Interest-rate sensitive sectors such as Consumer Staples, Real Estate, Communications Services, and Utilities are underweight, along with cyclically oriented Industrials and defensive Health Care. The sector model uses sector-specific indicators to determine opportunities and identify risks in an objective, weight-of-the-evidence approach.

The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model remains with a fully invested equity allocation recommendation as the composite score improved toward month-end.

The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model remains with a fully invested equity allocation recommendation, as the composite score improved toward month-end.

The risk management model seeks to reduce exposure to fixed income sectors most sensitive to equity drawdowns. The risk management model improved from last month and entered February recommending full model exposure to areas most sensitive to equity markets: U.S. High Yield, Emerging Markets, U.S. Investment Grade, and Floating Rate Notes.

The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high risk periods for the equity market. The model deteriorated in December but remains with a fully invested equity allocation recommendation.

The sector allocation strategy continues to be influenced by the rising rate environment which will likely lead to an economic recession, resulting in more Value and defensive sector leadership. Energy, Materials, Financials, Utilities, and Health Care are overweight, while Communication Services, Consumer Discretionary, Real Estate, and Industrials are underweight.

The risk management model seeks to reduce exposure to fixed income sectors most sensitive to equity drawdowns. While the risk management model deteriorated from last month, it entered January recommending full model exposure to areas most sensitive to equity markets: U.S. High Yield, Emerging Markets, U.S. Investment Grade, and Floating Rate Notes.