All things considered, it is quite impressive that stocks have held up given the persistence of inflation, and the consequent grinding up of rate expectations.
Now you can say that there’s poor breadth, that the equal weight S&P 500 hasn’t done well, that it is all AI related hype pumping up the Nasdaq and its constituents, and that’s fine, we say that too.
But it remains a fact that rates were touted as key drivers to pop the tech bubble, and here are rates busily going up a lot, while tech booms.
We’ve been fading that rally, using very strong returns across some of the active managers to lighten the exposure to Growth stocks, and in doing so, ups the defensives at the margin.
Overall, we are moderately defensively positioned, but mostly it is simply because cash, bonds + credit have very reasonable yields, and are very credible options, these days.
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