YTD: 12.0%
Performance YTD result is an estimated percentage based on a model account and may not be performance of your account.
As Of: 06/30/2019
Market Exposure
  • Equities
  • Fixed Income
  • Alternatives
  • Cash
Diversified Core
Strategy Overview:

Diversified Core invests in a diversified basket of global ETFs with a balanced objective of long-term growth and income. With the flexibility of modest tactical shifts across equity, fixed income and alternative solutions, the portfolio is designed to deliver a balanced approach to investing. This strategy’s philosophy and day-to-day execution attempts to create peace of mind for today’s retired investor. Diversified Core is a comprehensive solution designed to be the core of a retiree’s portfolio, providing necessary growth and income through their retirement years.

Date Update
August 8, 2018

iShares Intermediate-Term Corporate Bond ETF completed a 2-for-1 stock split yesterday that will lower the share price but increase the total number of outstanding shares. For each share of IGIB held, investors will be receiving 1 additional share. The corporate action is being processed intraday 8/8/2018 by most custodians and will be completed by 8/9/2018. The total value of shares outstanding is not affected by the split. The ETF also went through a change of ticker effective August 1, 2018. Previously CIU, the ticker is now IGIB.


Click here for additional information on the corporate action. If you have any questions, feel free to contact our advisory team.

June 29, 2018

With a dissapointing first half in emerging market equities (IEMG), what is the outlook for the second half of the year?

Our asset allocation model indicated a less bullish outlook for emerging market equities with valuation, macro and technical signals in negative territory. Macroeconomic data in the emerging market countries have failed to beat forecasts, as evidenced by a rapid decrease of the economic surprise index. China’s May economic activity data disappointed as fixed asset investment growth reached its lowest rate on record.

The important trade relationship between the U.S. and China has been fraught with friction for months. Tensions have been escalating in recent weeks as proposed tariff deadlines approach and both sides showing a reluctance to concede. The uncertainty and trade tensions have, in the short-term, negatively impacted financial markets. Souring investor sentiment from the heightened uncertainty is prompting more cautious economic behavior at a particularly inconvenient time.

June 29, 2018

What is your outlook currently for the Eurozone (EZU) particularly in regards to talks of U.S. trade protectionism?

First quarter final GDP numbers for the Eurozone confirmed that the region’s growth slowed at the start of 2018. A broad-based slowdown in investment was the main factor behind the easing of the Eurozone’s first quarter GDP growth rate. Eurozone industrial output, which fell by 0.9% month-over-month in April, and a weak energy sector were additional factors.

Our asset allocation model indicates a neutral-to-slightly negative outlook for the region with valuation, sentiment and technical signals all in negative territory. In the near term, souring sentiment due to trade uncertainties will likely keep investment subdued and impact manufacturing in major Eurozone countries. With the exception of May, the IFO sentiment index has decreased each month in 2018. Germany’s ZEW Indicator of Economic Sentiment has plunged by a cumulative 36.5 points over the past six months.

June 29, 2018

U.S. small-cap equities (IJR) have had a pretty strong run this quarter, to what do you attribute this upswing and how do you like it on a protective basis?

Small cap companies have more to gain from deep corporate tax cuts introduced by the Trump administration this year as they have often paid higher effective tax rates than their larger rivals in the past. Also, since small cap companies are generally less internationally oriented, they are generally less vulnerable to the impacts of potentially escalating trade tensions between the United States and other countries.

Our outlook for IJR is relatively bullish as it scores the highest compared with U.S. large-cap equities (IVV), U.S. mid-cap equities (IJH) and other major international equity ETFs.

June 29, 2018

What appeals to you about U.S. large-cap equities (IVV) heading into the second-half of the year?


The U.S. economy is still fundamentally strong with job growth accelerating since September 2017 and unemployment rates reaching new lows. Wage growth, as measured by the employment cost index for private wages, has also been rising which is generally consistent with the tightening labor market and a narrowing in the unemployment rate gap. Manufacturing has become one of the stronger components of the U.S. economy with almost all of the regional economies picking up steam in recent months. As a result of this positive economic data our market timing model shows a slightly more bullish outlook for the U.S. equity market compared with the first quarter’s outlook.

Sentiment remains optimistic as the U.S. consumer is feeling more upbeat about its current financial situation. However, the Trump administration’s formal announcement of additional tariffs on Chinese imports has raised concerns about trade tension between the two largest economies in the world. These tariffs could increase uncertainty and weigh heavily on financial market conditions and the collective sentiment.

January 3, 2018

What has been the most notable fixed income performer in 2017 in your Diversified Core portfolios, and to what do you attribute its gains?

CLY, the iShares 10+ Year Credit Bond ETF, was certainly among the top performing fixed income positions in our Diversified Core portfolio this year. The security was up 12.1% and we currently hold about a 15% position in our portfolio. With the U.S. economy remaining fundamentally strong, the default rate of corporate bonds is relatively low. Our ETF scoring model showed an attractive aggregate score for CLY throughout the year with valuations and sentiment signals being the strongest contributors.

What drove the additional allocation to U.S. equities in the ETF portfolios and how do you like the asset class heading into 2018?

We increased exposure to IVV (iShares Core S&P 500 ETF) as our model indicated a relatively bullish outlook for the U.S. equity market with stronger sentiment and macroeconomic signals. Leading sentiment indicators climbed or stayed at high levels in 2017 and producer sentiment recently strengthened. The ISM manufacturing index remained solid the last three months driven by the belief that the U.S. manufacturing conditions are improving as the global economy has strengthened and the U.S. dollar has depreciated. The homebuilder sentiment index also climbed steadily this quarter hitting 74 in December, the highest level since July 1999, indicating that the housing market is well positioned for growth in the coming months. Macroeconomic data became more bullish with the labor market continuing to tighten. Weekly initial jobless claims fell four consecutive weeks in late November and early December while industrial production posted steady gains for the last three months of the year.

We remain cautiously optimistic heading into 2018, seeing both strong growth indications as well as some cautious signals. The steady pace of economic growth is likely to be among the most significant drivers for the domestic equity market going forward. With the tightening labor market, wage growth, and surging stock and housing prices, consumers were one of the strongest sources of growth and will be looked upon to continue driving the economy moving forward. However, with the winding down of quantitative easing and possibly higher interest rates, risks remain for U.S. equity prices. We monitor these risks daily, especially as stock market valuations remain stretched. We have a similar rational for mid-cap equities in IJH (iShares Core S&P Mid-Cap ETF) as we have for IVV, being cautiously optimistic about the U.S. equity market throughout 2017 and moving into 2018.

What factors led to the trimming of Canadian equities?

We trimmed EWC (iShares MSCI Canada ETF) in October as macroeconomic data in Canada turned downward. GDP growth rapidly decelerated in the third quarter, slowing from an annualized rate of 4.3% to 1.7% as diminishing demand for exports offset an increase in domestic demand. The housing market in Canada was also hurt by the tightening of monetary policy and higher interest rates.

What themes will you be focusing on in 2018 when you consider your Eurozone positions?

Our outlook for EZU (iShares MSCI Eurozone ETF) remains optimistic. The relatively strong economic growth was among the major drivers of the impressive performance of EZU for the year. The bullish sentiment signals such as the PMI signals also suggested that Eurozone industrial sectors are firing on all cylinders. The highly accommodative monetary policy from the European Central Bank (ECB) certainly contributed to the market rally this year. Going forward, we will continue to focus on the outlook of Eurozone economic fundamentals, the sentiment of the market and ECB’s monetary policy. Unlike the Federal Reserve, we expect the ECB to keep a more accommodative stance in the near future if the Eurozone inflation continues to be below-target.

For more commentary from CIO Patrick Jamin on the final quarter of 2017, Click Here

October 4, 2017

What factors led to the addition of international treasury bonds (IGOV) to the ETF portfolios? Have there been any specific concerns with intermediate credit bonds (CIU) and mortgage-backed securities (MBB)?

The reasoning behind the addition of IGOV was two-fold. 1) Three out of four sub-groups of market-moving indicators (macroeconomic, technical and sentiment) were in positive territory and 2) IGOV’s liquidity improved recently. The trimming of CIU was driven by our global tactical asset allocation model, which displayed a relatively low score for the position. Its macro, valuation and sentiment signals were all in negative territory. We reduced the MBB position since mortgage rates have not risen as quickly as investors had expected. Therefore, the refinancing and prepayment risks of mortgage backed bonds were not significantly curtailed. The ETF’s score continued to drop, thus strengthening the argument to trim the position.

What development contributed to the increased allocation to Canadian equities (EWC)?

Canada’s economic growth has been robust this year. GDP growth accelerated in the second quarter at an annualized rate of 4.5%, besting the first quarter's already-impressive 3.7% pace. Robust consumer spending and a sharp uptick in exports made the strong second quarter gain possible.  The trade was also triggered by relatively strong sentiment signals in Canada, as well as the PMI extending its impressive run as August turned in the 15th straight above-50 reading. Compared with other region and country ETFs we monitor, the valuation signal for EWC was among the highest.

How do you like the prospects of large-cap U.S. equities (IVV) for the upcoming quarter?

The relatively strong economic growth was among the major drivers of EZU’s strong performance. The Eurozone recovery has become entrenched and broad-based, with net exports as the largest contributor to the expansion this year. The economic growth rate was slightly ahead of the U.S. and well ahead of the U.K. as Eurozone’s real GDP growth picked up to 2.3% in the second quarter.

In addition, job creation was very robust and the sentiment indicators, such as PMI, continued to be strong. The Eurozone Manufacturing PMI increased to 58.2 in September from 57.4 in August, pointing to the biggest expansion in manufacturing activity since February of 2011.

What led to the trimming of United Kingdom equities (EWU)?

Our model showed relatively weaker valuation, technical and sentiment indicators for EWU. UK’s economic leading indicator was not as optimistic as the Eurozone or other regions and countries. Economists forecasted U.K.’s GDP projection for the year to be 1.6%, down from 1.8% last year. 

The industrial sector, which continued to expand but failed to recoup losses from earlier in the year, was another negative signal. This confirms our view that factory growth will fail to offset 2017’s consumer-led slowdown in the service sector despite the pound’s sharp depreciation. We are also cautious about the long-term outlook of UK’s economy and equity market.

The fallout from departing the EU may have ripple effects on the economy and too many questions still remain before a clear picture of the post-Brexit U.K. emerges.

How do you like the prospects of large-cap U.S. equities (IVV) for the upcoming quarter?

Our model is cautiously bullish on U.S. large-cap equities (IVV). Although the valuation and sentiment signals remained relatively weak compared with other international equity markets, the fundamentals of the U.S. economy are still strong. The macroeconomic data that weakened, such as industrial production and initial jobless claims, was partially due to hurricanes Harvey and Irma. We expect the Texas energy and Florida tourism industries to be operating at close to normal levels by the end of the September. The expected recovery of Puerto Rico and surrounding areas from Hurricane Maria is yet to be determined. Rebuilding from the storms will boost GDP beginning in the fourth quarter and into 2018, and the longer-term economic impact of the storms should be negligible.

Although the labor market continued to show decent growth in recent months, consumers’ ability to lead economic expansion is likely to come to an end in the face of weakening salary income growth. Finally, the future path of short-term rates could add some possible volatility to the financial markets.

To read more commentary, check out a recent article publish in Investor's Business Daily, click here.

September 1, 2017

The Board of Trustees of iShares Trust has authorized a stock split for the iShares International Treasury Bond ETF (IGOV) for shareholders of record as of the close of business on August 28, 2017, effective after the close of trading on August 30, 2017.  Shares of the Fund will begin trading on a split-adjusted basis on August 31, 2017.The 2-for-1 split will lower the share price and increase the number of outstanding shares.

The total value of shares outstanding in your portfolio is not affected by the split. Detailed information is available on page 2 of the IGOV Summary Prospectus by clicking here. Additional information on stock splits can be found here

January 19, 2017

BlackRock announced today the Board of Trustees of iShares Trust has authorized a share split for iShares Core S&P Small-Cap ETF (IJR). The Board has approved a 2-for-1 split for this fund for shareholders of record as of the close of business on January 13, 2017, payable after the close of trading on January 18, 2017. The 2-for-1 split will lower the share price and increase the number of outstanding shares. The total value of shares outstanding in your portfolio is not affected by the split.

You can read more information on the split by clicking here

August 3, 2016
What is attractive about CLY (10+ Year Credit) right now?

The expectation of fewer future rate hikes makes U.S fixed income with relatively longer duration more attractive. Three out of four categories of our indicators are positive for CLY: valuation, technical and sentiment. The relatively high yield of CLY (4%) can be helpful in boosting the income for the strategy.

Given the current market conditions, our cash scaling model indicates a modestly bullish outlook on U.S equity market with a targeted investment level at around 85%. Instead of holding the remaining assets in cash equivalents, effectively yielding 0%, the strategy invests in CLY. However, we closely monitor the duration risk of the position.

What do you attribute the recent strength of IVV (S&P 500 Index) to with the S&P 500 setting new highs? And what is your sentiment going forward on the position?

We believe the fundamentals of U.S. economy are still sound.  The better than expected payroll employment in June indicated that the labor market has regained some momentum after the weaker data in May.   In fact, the job market has enjoyed the longest string of consecutive monthly job gains in the nation’s history.  Consistent with the steadfast job market is the acceleration in wage growth which is closer to 3% compared with 2% throughout much of the recovery.

U.S. manufacturing sector is showing signs of improvement with higher PMI data and improved industrial production. The key channel through which the British exit would harm the U.S. economy is through financial markets. But stock prices and credit spreads, which did suffer in the immediate wake of the vote, have recovered.

How does EZU (Eurozone) look to you right now? Are there any catalysts that jump out at you as being key to driving the pushing higher in the months ahead?

The estimate from economists is that GDP will be about a quarter point lower a year from now and about a half a percent five years from now for EU after the Brexit.  However, we believe that a lot of the downside risk has been reflected in the equity market prices by now.

Valuation and sentiment signals have improved recently for EZU. We expect that the ECB will deploy all policy instruments if necessary to boost the economy, including expanding asset purchases, injecting additional liquidity support, or lowering interest rates.  

November 2, 2015

After the dust settled following a few rocky months of market volatility, conviction swayed away from emerging markets and back toward developed markets such as the U.S and the Eurozone. Over the course of October, Diversified Core and Diversified Growth removed exposure to EEM (emerging market equities) and EMB (emerging market bonds) as macro-economic signals showed signs of deterioration in emerging markets. Exposure in IVV (U.S. large-cap equities) was reduced earlier in the month due to lower macroeconomic signals after the quick equity rebound. The available cash was put to work in IJH (U.S. small-cap equities) and EZU (Eurozone) as the outlook in developed markets increased throughout the month. There is still cause for concern in equities, therefore the reduction in EMB (emerging market bonds) was replaced with CLY (10+ Year Credit Bond) as long-term growth potential is still strong in the U.S.

September 11, 2015

After a five-month price decline, NorthCoast seeks to take advantage of current valuations by purchasing EEM (Emerging Markets) as technical and macroeconomic indicators turn positive. The position replaces exposure to EPP (Pacific ex- Japan). EPP experienced a similar drawdown over the last five months and was liquidated as it reached its designated sell-stop coupled with a diminished future return potential.

August 18, 2015

After being a strong and profitable position over the last two years, Diversified Core sold its remaining stake in IJR as the economic outlook (macro, valuation, and sentiment signals) in U.S. small-cap equities weakened relative to Eurozone equities. Therefore, the sell in the position was replaced with a 4% increase to EZU. Recent PMI manufacturing data in Europe indicated economic activity is accelerating more than in other areas, coupled with strengthening sentiment, technical and valuation indicators.

The strategy also eliminated exposure, previously a 7% allocation, to CIU (iShares Intermediate Credit Bond ETF). The strategy used some of the available cash to buy EMHY (emerging markets high yield bonds). With strong data signals supporting the purchase, the position produces a current yield of 6.3%.

July 23, 2015

Another reduction in IVV occurred as our outlook in U.S. equities weakened relative to equities in Japan (EWJ). Valuation, macro and sentiment signals all dropped to negative territory. The reduction in U.S. equity exposure paved the way for an increased allocation to EWJ, given its relatively bullish technical, sentiment, macro and valuation signals in our ETF selection model. EWJ should benefit from Japanese pension plan reallocation from fixed income to equities, massive asset purchasing by Bank of Japan, low interest rate environment and improving corporate governance of Japanese firms.

June 2, 2015

NorthCoast's Diversified Core was highlighted in the recent publication of the Investor's Business Daily. The commentary stresses the importance of building a core portfolio aimed for long-term growth with income benefits. You can read the article here

May 13, 2015

Another reduction in U.S. equities occurred with small-cap stocks (IJR) getting trimmed as our outlook in U.S. equities weakened relative to our positive signals in EZU (Eurozone). Momentum continues to improve in Europe with an attractive entry level. Therefore, a 5% buy in EZU replaced the 5% sell in IJR.

May 4, 2015

Exposure to Eurozone (EZU) was increased given our outlook for a stronger economy and better sentiment in the area. The Eurozone economy has been growing at a modest rate during the first few months of 2015. The quantitative easing by the ECB and a weaker euro helped to boost the economy and earnings estimate of the companies.

April 6, 2015

Diversified Core shifted global allocation in March as it increased exposure to Japan (EWJ) and the Pacific ex Japan (EPP) and reduced exposure to large and mid-cap U.S. equities (IVV/IJH). The strategic change comes as U.S. valuations draw concerns while outlook for international equities continues to improve.

February 3, 2015

Weakness in Japan’s corporate sector is increasingly evident, even after two years of quantitative easing efforts to boost the economy.  Despite the effort, private investment decreased and key economic indicators remain weak. Diversified Core sold its 4% holding in EWJ as our score in the position turned negative. The position was replaced with EMB. Macroeconomic indicators of leading business development and industrial production in emerging markets are improving. And with a relatively attractive yield in the position, the strategy added exposure.  

January 1, 2015

Diversified Core ended the year in positive territory, but with high exposure to international equities, they struggled as foreign stocks underwhelmed and small-cap equities significantly under-performed their large-cap counterparts. The large holding in IVV guided the positive performance. The strategies were slightly underweight U.S. equities, neutral on Europe and modestly overweight on Japan. The underlying reason for this allocation was that, when comparing historical equity valuation multiples of the different regions, the valuation indicators were very attractive.

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