Performance
YTD: -2.0%
Performance YTD result is an estimated percentage based on a model account and may not be performance of your account.
As Of: 09/30/2019
Market Exposure
  • International Equities
    73%
  • Cash
    27%
International Select Hedged
Strategy Overview:

International Select Hedged is a fully tactical investment strategy designed to generate long-term growth with downside risk protection. The strategy utilizes a proprietary scoring and selection process to actively allocate across international country ETFs. The strategy invests in countries with higher risk-adjusted return potential and reduces or eliminates exposure to countries with lower risk-adjusted return potential while applying defensive cash scaling risk controls designed to reduce volatility and mitigate significant loss.

Date Update
September 20, 2019

What is your outlook in Emerging Markets?

Our outlook for Emerging Markets has decreased slightly compared with the end of last quarter, but we are still on the positive side with strong macroeconomic and sentiment signals. Areas of concern include China’s August industrial production figures, fixed asset investment, exports, and retail trade, which all weakened. The recent spike in oil prices might also have adverse consequences on China's economy. Higher fuel prices might dent already-weakened consumers’ discretionary spending and add input costs in an already-weakened demand environment.

 

September 20, 2019

What appeals to you about Pacific region, specifically Australia, going forward?

Our model indicated a relatively strong score for the Pacific region with three of the sub-group of signals (valuation, macro and sentiment) all in positive territory (Technical indicators make up the 4th sub-group). Although Australia’s GDP growth hit a decade low in Q2, the almost 30-year uninterrupted growth track record isn't under material threat. The exports sector of Australia was of particularly important strength. Both the buoyant demand and high prices for hard commodities and the weak Australian dollar are important drivers of the export. Australia saw a current account surplus of $5.9 billion in the June quarter, the first surplus since mid-1975.

 

February 26, 2019

The International Select Hedged ETF strategy began reinvesting on 2/26/2019. Equity exposure after all trades were executed was approximately 30%. The strategy went fully to cash on 5/29/2018 after the ACWI Ex-U.S. (MSCI All Country World Index Excluding the U.S.) closed below its 200-day moving average and appeared unlikely to reverse its downtrend. Over the period the strategy was fully in cash, the ACWI Ex-U.S. experienced a max drawdown of -14.2% and the total return was -3.5%. We will continue to monitor the recovery of technical indicators daily and invest in the top scoring regions according to our model.

 

Source: Bloomberg, NorthCoast Asset Management.

May 29, 2018

International Select Hedged Moves to 100% Cash Position

On May 29, the International Select Hedged investment strategy liquidated all equity positions and moved to a 100% cash position to preserve capital in the portfolio.

Since reaching a near-term high in late January, international equities have declined and traded in a volatile range over the last few months, eventually reaching a yearly low on May 29. Part of the investment mandate is to execute what we call a ‘circuit breaker’ action when a specific technical indicator occurs. We implement this particular action when the international equity index, MSCI ACWI-ex U.S., crosses below the 200-day moving average.

This technical indicator has historically shown that when indices fall below their 200-day moving average, there is a higher likelihood the index will continue to decline. Therefore, we execute this rule to protect clients from any further short-term or even catastrophic losses in their portfolio. When the index eventually rebounds and crosses back over the 200-day moving to the upside, we will begin investing again.

October 4, 2017

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.

To view more comments, check out a recent article published in the Investor's Business Daily, click here.

September 20, 2017

 Global Select, International Select, International Select Hedged and Emerging Market Select are the newest offerings by NorthCoast and the firm is excited about the opportunity and timing. Click here to learn more.

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