The equity markets have undergone a pullback in recent weeks. Fixed income markets have been up during this time as investors have sold equity positions in favor of fixed income. Our more conservative models have reduced equity allocations in favor of fixed income over the last year. Our models are focused on the long-term and invest according to the fundamentals. The markets were slightly inflated recently; this is why we have reduced the domestic equity positions in the models.
Short-term volatility can be a cause for discomfort, however, over the long-term, managing assets according to a disciplined model has proved to be the best approach. We are examining value opportunities as the equity markets have receded. We will continue to evaluate the fundamentals thoroughly during this short-term, volatile period. Buying opportunities typically arise after a short-term selloff. As always, if you have any questions pertaining to how we mitigate risk in the portfolios, we are available via phone or email.
–HFS Asset Management Committee