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CLS: Market Update – Role of a CIO


April Market Review
April was another positive month for the U.S. stock market, as well as the global financial markets. Despite pessimism early in the year, the S&P 500 (a proxy for U.S. large capitalization stocks) is now in its third longest stretch without a 20% decline since 1927. The U.S. economic expansion is in its fourth longest stretch since 1945.

In April, the U.S. stock market (Russell 3000) was up 1%, the international stock markets (MSCI ACWI ex-U.S.) were up over 4%, and the U.S. bond market also gained nearly 1%.

CLS Portfolios: Update
How Did CLS Perform?

CLS portfolios participated in April’s gains and continue to have solid annual returns. So far, it’s been a good year to be a global investor.

However, not everything worked in our favor last month. Our emphasis on the technology sector, for instance, was not rewarded as the last week of the month was not kind to large-cap tech names like Apple or Microsoft. Nonetheless, we continue to favor this sector for a combination of reasons. Another strong portfolio emphasis is on emerging markets (EM). While we still had gains in our positions and EM is having a great year, it did lag a bit last month.

One notable positive to portfolios was our exposure to the energy sector, which did provide a strong positive contribution as it continues to rebound from its losses last year.

What is CLS Currently Thinking  and Doing in Portfolios?
Our Investment Themes are intact. First, we continue to favor and expand our use of “smart beta” exchange traded funds (ETFs).  These ETFs, which essentially capture the essence of active management styles (but at a fraction of the cost), such as investing in high-quality, or value stocks, continue to provide a strong backbone to our portfolios. They have added value this year, particularly during periods of market weakness.

Secondly, we continue to focus on international opportunities, where we are putting a much stronger than usual emphasis on non-U.S. stocks. We not only have strong valuation support for this theme, but also momentum on our side.

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