Market insight and a highlight of Cabana’s year-to-date performance
Cabana’s six portfolios range from “Conservative” to “Aggressive” and include an income strategy portfolio. Performance is as of market close October 23, 2017 and is presented net of maximum advisory fees and commissions.
Cabana’s portfolio performance was mixed this week. The Moderate, Balanced, Growth and Aggressive were down – between -0.25% and -0.61%. The Conservative and Alpha Income portfolios were up -+0.50% and +0.08% respectively.
Equity and bond markets continue to digest earnings while balancing the risk of further interest rate hikes at the short end of the yield curve. There has been some pronounced volatility in yields, with a big jump on Monday of this week. On one hand, an increase in yields across the yield curve may evidence growth consistent with strong earnings by companies here and abroad. On the other hand, higher yields at only the short end of the curve (the one controlled by the Federal Reserve) reflects a lack of expected inflation (e.g. growth), in the future. This only serves to flatten the yield curve and reduce the money supply – banks can’t make as much money on loans. As a rule, a steep yield curve is good and a flat yield curve is bad. Unfortunately, we are not seeing the long end keep up with the short end. To me, this is the biggest risk out there and one that we are monitoring. One way to end a bull market is to raise short term rates when growth is not sufficient to absorb the costs. It hasn’t happened yet, but it could. We remain bullish.
Year-to-date net-of-fees performance:
ALPHA INCOME: +5.14%
Performance is presented net of advisory fees and commissions (Conservative – Aggressive is presented net of 3% fees from January 1, 2017 – February 28, 2017 and 2% beginning March 1, 2017; Alpha Income is presented net of 2% fees)
-G. Chadd Mason, CEO
*Performance numbers indicated with (+) for positive return and (-) for negative return.
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