A&I Financial Services > Blog > Inflation and Our Portfolios in Q1 2022

 

Read this post for insights into what we are doing to protect our usual client portfolios from inflation and the investment opportunities we see today.

Last week we gave a link to clients with a lot of detailed information. Today’s newsletter is shorter than that, but still pretty detailed! Make sure to contact your financial advisor if you have questions or concerns.

In terms of investments, the good news shows up in a portfolio we call SBMA: Secular Bear/Bull Market Allocation. Managed futures are benefitting from the recent market chaos. The benchmark SG Trend Index gained 17.9% for the quarter and posted gains in each month. Trends in interest rates and bonds have been a powerful contributor to their performance this year, a sharp contrast to the losses in investment-grade bonds.

In terms of our fixed-income allocation, our tactical positions in flexible, actively managed bond funds and floating-rate loan funds again added value relative to the core bond index from which the positions are funded, although they posted absolute losses. This was not surprising given the interest rate and credit market backdrop during the period, with Treasury yields sharply rising and corporate bond spreads widening.

On the downside, our tactical overweight to emerging market (EM) stocks detracted from relative performance. After a strong January, EM stocks gave up ground in the latter half of the quarter, trailing U.S. stocks and bonds. Our active EM fund managers, in aggregate, also trailed the EM index.

 

About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.