Federal Reserve officials in June saw the economy moving toward conditions that would support an interest-rate increase, while also expressing concern about weak consumer spending and risks from China and Greece.
China Stocks Plunge as State Support Fails to Revive Confidence (source: Bloomberg)
These are the headlines that our clients are absorbing today. After a very nice run the stock market has taken a breather; all signs point towards rising rates and volatility is not taking a summer vacation. So what is our response as we seek to guide advisors and their clients through the current environment?
Our response is the introduction of Market Movement Strategies (MMS). We believe MMS to be a process that provides confidence during all market cycles. The ability to have a targeted portion of the model built specifically to combat falling and sideways markets may provide an opportunity for durability and consistency not available to clients investing in market beta only portfolios.
Now is the perfect time for your current clients and prospects to be taken through the MMS process. Utilize our new risk return questionnaire that asks the client to think about different market cycles and respond to questions about their wishes for their portfolios as markets rise and fall. Use the new FTJ FundChoice proposal system to prepare a three mandate proposal, allocating to diverse strategies that seek to insulate clients from extended periods of volatility and help them stay confident in your process and access to sophisticated strategies.
Have your clients answer these questions:
Do you agree that global markets, though volatile, have historically been great engines of long-term wealth creation, and a portion of your portfolio should be exposed to the returns and volatility associated with these markets?
Would you expect a portion of your portfolio to be actively managed during periods of market volatility?
Should a portion of your portfolio be excluded from market movement during periods of market declines?
These first three questions on our risk return questionnaire will help clarify for you whether the client’s current investment mix is appropriate for their expectations. If not, the right combination may be available within the Market Movement Strategies platform.
The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. An investor may experience loss of principal. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon, and risk tolerance. The asset classes and/or investment strategies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment strategy. FTJ FundChoice does not guarantee any minimum level of investment performance or success of any index portfolio or investment strategy. Past performance is not indicative of future results. Indices are unmanaged and their returns assume reinvestment of dividends and do not reflect any fees or expenses. It is not possible to invest directly in an index. Information obtained from third party sources are believed to be reliable but not guaranteed. FTJ FundChoice makes no representation regarding the accuracy or completeness of information provided herein. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.