Mid-August, 2013: Europe Sees Long Awaited Growth in GDP
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
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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.