Breadcrumbs

The mid August reallocation saw global indexes continue to hold equities, however, there was a strong rotation by PCM’s Global Tactical Index from US equities into the European markets, specifically Austria, the Netherlands, France and Spain. This came on the heels of Europe reporting growth in GDP after a record 6-quarter long double dip recession. (see zerohedge.com article). In a further quantitative vote of confidence for the region, the Euro, represented in our models by ETF ticker FXE, was the main choice for the next two weeks in the Alpha One Index.

The PCM US Bond Index and  PCM Absolute Bond Index  both committed to the inverse 20 year treasury bond. Due in part to the multi-directional ability of these indexes, the PCM Absolute Bond Index composite  was ranked as achieving “Top Guns” status within the Informa Investment Solutions'  manager ranking database for 2Q 2013.

As of the end of July, the PCM US Industries Total Return Index reached another all-time high.

By: Melissa Wieder, CFP®, Director Institutional Services

Collaborative insight provided by Co-CIO’s Michael Chapman and Todd Wood

The views and strategies described herein are for illustrative purposes only and may not be suitable for all investors. The information is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as investment advice or a recommendation for any specific PCM or other strategy, product or service. Investors should consult their financial advisor prior to making an investment decision. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. This material contains the current opinions of the author(s) but not necessarily those of PCM and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission.Provident Capital Management, Inc, PCM and Absolute Return Index are trademarks or registered trademarks of Provident Capital Management, Inc., in the United States.©2013, PCM.

About "PCM Quant Coalescence"

Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models rebalance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives. As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.

Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach.Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass.We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

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