April '17 Growth Model trading update

No change to the growth model portfolio which had a solid start to the year, +8.15%. All investments were up during the quarter with four of them (biotech, both tech funds, and the emerging markets fund) were up double-digits. In this strong environment, it was not surprising to have the conservative floating rate bank (fixed income) fund lag, but it was a bit more of a drag to see both financial funds and the energy-centric master limited partnership exchange traded fund lag. Another disappointment was the contrarian Comstock fund. That performance makes the task of zero-ing on the best available contrarian fund all the more important.

From a sector point of view, I still want to focus on technology and financials, so there was not a lot of thought given to switching around the sector strategy. The strong performance and cheap valuation of the emerging market ETF has that position pretty safe for now. What is hardest to justify is the continued emphasis on commodities via the MLP ETF, which suffered a weak quarter while at the same time commodities, generally, are weak versus international investing, to the point where the continued overweight in AMLP might be tough to justify. For now, it's staying, but the energy oriented AMLP is definitely on a short leash. It is has been going in and out of favor for the past six months. The decision to hold it has paid off, but commodities are having a tough time continuing to earn their place in this growth oriented portfolio.

Finally, there is little reason to consider a tactical move into cash on the sidelines. Economic activity seems strong, market breadth and momentum is very strong, and while valuations aren't particularly attractive, the competition (bonds and cash) aren't exactly offering attractive returns either. For now, this portfolio will stay fully invested for the foreseeable future (in this case, at least until our next scheduled review after the end of the month).