YTD: -9.2%
Performance YTD result is an estimated percentage based on a model account and may not be performance of your account.
As Of: 04/30/2020
Market Exposure
  • Equities
  • Cash
Strategy Overview:

Tax-Managed is a long-term tactical growth strategy focused on capital appreciation with a mandate to reduce the impact of tax consequences. The strategy invests in leading growth stocks during favorable equity environments and scales to cash to preserve gains when bear market risk is high. The strategy adheres to a flexible investment mandate that allows for allocation shifts that range between 0%-100% exposure to equities. Positions are managed (purchased and liquidated) through a proprietary stock scoring system with tax considerations designed to build a comprehensive growth portfolio.


  • Long-Term Growth 

  • Tax-Efficiency 

Active Management for a Changing Market:

  • People are living longer, and the road to financial security is only getting more complex. Investors require thoughtful solutions that properly balance the financial tradeoff between portfolio growth and peace of mind.

  • The rise of the Exchange Traded Fund (ETF) marketplace has provided NorthCoast with one of the tools necessary to deliver investment products designed to manage this tradeoff. Utilizing a variety of ETFs, NorthCoast can provide investors with increased transparency, lower costs, and greater consistency.

Date Update
September 20, 2019

How are you expecting U.S. equities to finish out the year?

Our global tactical asset allocation model still indicates a cautiously bullish outlook for the U.S stock market in the near-term. However, the long-term signals have decreased recently. The short-term targeted equity level at the moment is around 90% while the long-term signals indicates a target level of about 70%. An area of concern is that the probability of a recession has slightly grown. We monitor a number of data points to help determine the probability of a recession. For example the yield curve, which went into a deeper inversion, contributed to the elevated odds.

However, we don’t expect a recession to occur in the near future since the macroeconomic data points we monitor are still relatively upbeat. Industrial production rose 0.6% in August, its third increase in the last four months. The total capacity utilization also rose 0.4%. Some macroeconomic and sentiment figures are less optimistic including the labor market and PMI data. The labor market moderated further in August. Payrolls increased by 130,000 jobs, bringing average growth to 158,000 per month this year, far below the 2018 pace, confirming suspicions that the pace of hiring has cooled. Also, U.S. PMI data has been decreasing every month since March this year. In August, the PMI data indicated that the U.S. manufacturing sector is contracting for the first time since the end of the energy rout. The ISM manufacturing index fell from 51.2 in July to 49.1 in August, the lowest reading since January 2016 and below the neutral threshold level of 50.


January 8, 2019

Q4 | Equities experienced one of their worst Octobers in a decade when major indices fell over -16%. The almost +3% move over the final two days of the month buoyed stocks for a temporary relief but they still finished the month down almost -7%, the index’s worst month in 7 years. Rising interest rates, a stronger dollar, and continued escalation of trade conflicts with China could have all attributed to falling stock prices as investors reevaluated their outlook on future growth. The brief pullback provided a small buying opportunity as we increased exposure to 88%, a final high point on the year. As equities experienced a modest bump in November, we removed exposure in anticipation of further decline to end the year. We entered December with 30% cash and reached a high cash level of 35% after the 1st week of trading. Then as stocks continued to trade negatively with major volatility, we marginally increased our equity exposure throughout the month as valuations became more attractive along with the lack of real economic data warranting a substantial decline.

January 1, 2019

What is your outlook for the U.S. equity market for 2019?

Our global tactical asset allocation (GTAA) model still signals a relatively bullish outlook for the U.S. equities. Strong readings in sentiment and valuation indicators outweigh weaker technicals and recent price pullbacks. 

In 2018, the U.S. economy enjoyed a banner year with real GDP annual growth rate on track to increase by close to 3%, which is the strongest gain of the nearly decade-long expansion. We believe the deficit-financed tax cuts and government spending increases will continue to help the economy grow much of next year. We also expect the labor market to continue to grow and unemployment to stay low by historical standards. 

Despite these positive signals, we do recognize some possibilities of weakness moving forward. The stimulus effect might fade and put downward pressure on the market in the longer term and diminishing labor supply might result in gradually decreasing prices. The ceasefire between the U.S. and China may indicate that the worst of the escalations are behind us. However, the trade tension remains and might contribute to equity volatility. We do expect some market volatility to continue through 2019 despite our model indicating that the odds of a near-term recession remain relatively low.

October 8, 2018

Q3 | Despite unsettling news in the tech sector, U.S. equities rose in July on a more optimistic trade outlook, generally positive earnings data and economic growth. Lagging growth abroad was a point of concern with important events such as Brexit decisions and trade discussions on the horizon. Domestically, the economy remained strong but trade uncertainty still casted a shadow. Technology stocks and more positive economic data bolstered U.S. equities in August despite continued trade uneasiness. The bull market became arguably the longest on record in August. The Federal Reserve would raise rates again in September, the 3rd time this year, putting pressure on bond issuances with higher borrowing costs, stoking fear of possibly less private-sector investment. Despite only a modest rise in September, the S&P 500 had its best quarterly return since 2013. The strong quarterly returns for U.S. equities were a sign that investors were prioritizing the solid corporate earnings and positive economic data over global trade tensions. Throughout Q3, we averaged an 80% equity exposure.

July 8, 2018

Q2 | Our model recognized elevated levels of risk in the equity market and we reduced exposure accordingly, reaching a 70% equity exposure at the end of April and maintaining that posture into June. Among the key indicators, only the macroeconomic data remained bullish during this stretch. P/E multiples continued to make equities overpriced versus historical averages, a relatively low volatility index (VIX) predicted possible complacency in the bull run and key consumer surveys, such as the University of Michigan Consumer Sentiment survey, decreased over multiple months. Sentiment data provided a cautiously optimistic stance as U.S. consumers, now with reported higher wages, were more upbeat about their current financial situations. Alternatively, the U.S. administration’s additional tariffs on China raised trade concerns which could increase uncertainty and dampen the collective consumer and producer sentiment. The late June pullback provided a buying opportunity and we increased our exposure to 80% to close out the quarter.

June 1, 2018

Wyndham Destinations, Inc. (WYND), formerly Wyndham Worldwide Corp, completed a one-to-one spinoff of Wyndham Hotels & Resorts (WH). This spinoff will most likely be completed by Monday, 6/4. In the meantime, account balances of some NorthCoast client accounts may appear lower until the new shares of WH hit the accounts. Once they do, account balances will be corrected and accurate.


For further information please click HERE and, as always, please feel free to contact our team. 

April 5, 2018

Q1 | January saw both a very hot start to the year for equities as well as the largest daily decline since August of last year. Low yields had been supporting the sky-high equity valuations but, as bond yields increased, they began to impact our outlook on future return potential. With early risks of 2018 taking shape, we began to decrease exposure from 95% to 85%. At the end of January into February, the market sold off, declining almost 8% in just over a week. Viewed as an overreaction, we sent out research explaining our continued opportunistic position (“An Expected Change in Volatility”). Markets rebounded over the next month. Overall, the first quarter experienced a large increase in market volatility and surprising headline risk. However, our outlook remained positive. Beneath the headlines, fundamentals remained strong with the U.S. and global economies expanding along with corporate earnings. Aided by rebounding producer and consumer survey results and long-term market momentum, the majority of macroeconomic, sentiment and technical indicators were positive.

June 1, 2014

NorthCoast has evolved as a result of investor demand and expanded its separate account offerings and now offers a tax-efficient tactical equity portfolio. 

• Majority of gains are long-term vs. short-term -- with a target of 80% long-term / 20% short-term

• Management increases holding periods and reduces profit taking trades to lower strategy turnover

• Year-end tax harvesting implemented in attempt to off-set gains