Investors are continuing to look outside of the S&P 500 as we head into the second quarter. In fact, according to market technician John Lewis of Dorsey Wright Money Management, their investor platform now has the iShares S&P Latin America (ILF 28,50 -0,08 -0,28%) as a top three market based on momentum and relative strength.
Worth noting, ILF is up over 16% this year.
“We focus on trend following and price movement because we think it is an objective way to look at markets across assets, borders and sectors,” he said in one of our webinars recently. The one hour webinar on global tactical investment strategies is now available on demand.
“The S&P has been an out-performer, but that won’t last. It’s time to start shifting that thinking into other areas outside of our borders where you can generate alpha,” he says.
Dorsey Wright takes a “follow the money, follow the trend” approach to investing. And what they’re seeing on their screens now is that momentum is moving out of the broader U.S. indices.
Lewis thinks it is a compelling time for global markets to outperform. The fact that the S&P has been the only game in town for the last few years, a cyclical phenomenon, suggests investors will take some money off the table and put it to work in cheaper markets.
Dorsey’s managed products and investment services give investment advisors turn-key access to their Relative Strength strategies, driven by Dorsey Wright’s global technical research. Their models have led to the creation of a number of fund of funds. To check on their performance, see product tickers like the Virtus Equity Trend Fund (VAPAX 12,87 0,00 0,00%) and the Arrow DWA Tactical Fund (DWTFX 8,72 +0,05 +0,58%).
The inflation story is also an important one. As prices are rising in the core economies, they are falling in emerging markets. Inflation is under control there. Interest rates are coming down while interest rates in the U.S. are rising.
Even though Fed rates are expected to hit 3% this year, there are a number of investment grade countries that have higher yield, both in dollars and in the local currency market. So you have falling interest rates, which can be an equity tailwind, and you have high enough yield that investors are not required to think too hard about holding a 2.8% 10 year Treasury bond versus a 6.5% investment grade Colombia bond, in dollars.
Barring some calamity in the U.S. or Europe, there will be continued rotation to non-core securities. It is already happening. Last week’s retail funds flow data from EPFR Global showed the strongest positive flows into emerging market bonds since last July. Asset Allocators Looking Overseas
Investors are continuing to look outside of the S&P 500 as we head into the second quarter. In fact, according to market technician John Lewis of Dorsey Wright Money Management, their investor platform now has the iShares S&P Latin America (ILF 28,50 -0,08 -0,28%) as a top three market based on momentum and relative strength.
Worth noting, ILF is up over 16% this year.
“We focus on trend following and price movement because we think it is an objective way to look at markets across assets, borders and sectors,” he said in one of our webinars recently. The one hour webinar on global tactical investment strategies is now available on demand.
“The S&P has been an out-performer, but that won’t last. It’s time to start shifting that thinking into other areas outside of our borders where you can generate alpha,” he says.
Dorsey Wright takes a “follow the money, follow the trend” approach to investing. And what they’re seeing on their screens now is that momentum is moving out of the broader U.S. indices.
Lewis thinks it is a compelling time for global markets to outperform. The fact that the S&P has been the only game in town for the last few years, a cyclical phenomenon, suggests investors will take some money off the table and put it to work in cheaper markets.
Dorsey’s managed products and investment services give investment advisors turn-key access to their Relative Strength strategies, driven by Dorsey Wright’s global technical research. Their models have led to the creation of a number of fund of funds. To check on their performance, see product tickers like the Virtus Equity Trend Fund (VAPAX 12,87 0,00 0,00%) and the Arrow DWA Tactical Fund (DWTFX 8,72 +0,05 +0,58%).
The inflation story is also an important one. As prices are rising in the core economies, they are falling in emerging markets. Inflation is under control there. Interest rates are coming down while interest rates in the U.S. are rising.
Even though Fed rates are expected to hit 3% this year, there are a number of investment grade countries that have higher yield, both in dollars and in the local currency market. So you have falling interest rates, which can be an equity tailwind, and you have high enough yield that investors are not required to think too hard about holding a 2.8% 10 year Treasury bond versus a 6.5% investment grade Colombia bond, in dollars.
Barring some calamity in the U.S. or Europe, there will be continued rotation to non-core securities. It is already happening. Last week’s retail funds flow data from EPFR Global showed the strongest positive flows into emerging market bonds since last July.