IAS – Update on risk posture and other observations
The fiscal quarter just ended and we thought we’d update you on a few important notes about the Equity strategies in the Internet Advantage Strategy family.
Many of you may have noticed that we increased our bullish exposure on September 15th. We had moved to a more conservative posture on August 11th but by September 15th, our signals directed us to be more aggressive.
On that date, we reduced the short exposure in the Equity Long Short portfolios. And in the Best Equity picks, we rotated to more fully invested in the long individual equity portfolio.
Since September 15th, the signals continue to confirm a bullish bias. If that changes, we’ll update you.
Our GIPS verified numbers are not final yet but the preliminary numbers will show a strong Q3 and a record month of September. The Equity Long Short will be up just under +5% for the month of September.
The Best Equity Picks portfolio will finish above +6% even after fees for the month of September. That is nearly the highest absolute return we have ever had. Once finalized, it will be the highest returns relative to its benchmark (Russell 3000) we have ever seen. In other words, we created the most separation from the benchmark that we have ever had in September.
Lastly, where are the returns coming from?
Our portfolio was skewed towards technology and consumer stocks – both cyclical and defensive. These three sectors contributed the most return to the portfolio. Given the over-allocation to these sectors, that might not surprise anyone. However, the out-performance within these sectors was also strong. These three sectors delivered the most returns attributable to selection. That means the stocks we bought in these three sectors managed to out-perform their sector peers.
The S&P 500 technology sector was basically flat in September. But our long portfolio of technology large caps, mid-caps, and small caps combined to deliver +5.18% returns in that category.
Our returns continue to come from stock selection – not sector or allocation decisions. That is the whole point of our strategy: find surprises at individual stock level.
If you have any questions, please reach out and call us at 443-288-6444. We love discussing our strategies!