January 08, 2024
Commentary: NCM Global Income Growth Class
On January 8, 2024, Portfolio Manager Jason Isaac, CAIA, CFA, shared a market update and some insight into his aggressive asset mix positioning heading into 2024.
Hello, everybody. Happy New Year. This is Jason Isaac coming at you with the NCM Global Income Growth update. It’s January 8, 2024 and it looks like most of the western provinces are finally getting an arctic blast.
The last update was in October. Things have changed. The market was in a different place at that point. Everybody was worried rollover and a recession. We've definitely got some gas poured on the fire since then. November, everybody can remember November was really, really well. And then the Fed in December came out and suggested that they're done hiking.
News items that are of note today. Boeing had a little bit of an issue with the plane. Again, it seems like we do this every 6 to 18 months.
The market seems to be betting - I'm just looking at my futures contracts here - betting that the Fed will decrease rates 5 to 6 times in 2024 and that we may have a spending deal in the United States if it seems to be old news and the market kind of buries it. But it is an issue with whether there's going to be a government shutdown in the United States. But it looks like tentatively the Republican House and the Democratic Senate have come to a deal. Time will tell. But that's where we're at. So cautiously optimistic.
From an outlook perspective, inflation has come down. You're seeing that in a bunch of numbers and the growth position still looks good. That combination suggests a constructive positioning for the equity markets 6 to 7 months out.
Defensives are still underperforming cyclicals, you would have guessed, given all the bad headlines in 2023, that it would have been the other way around. But that's not the case.
The thing that did catch my eye over the last couple of months has been how strong beta has been. This is basically stocks that perform stronger or have more torque to the market. Beta in general is about at the 96 percentile, meaning there's only been about 4% of the time going back to 1980 I think is the data suggests that beta versus value or low beta is more expensive. So this actually we're seeing with some of the names that have been sold off at the beginning of the year, which isn't surprising was what happens in January.
Looking to the position of the portfolio, we’re about 3% cash, we’re about 12% fixed income and 85% stocks so aggressively positioned on the asset mix side. Again, as I've said before and over and over again tend to be conservatively positioned within the individual names, but very aggressive on the asset mix.
The biggest change, note we haven’t made a lot of changes in the top ten, but the biggest change has been we've increased the exposure to the United States and decreased the exposure to Europe to, to a certain extent.
Names that were liking or specific is sectors that we like, banking. The banks look like that's tailwind here, especially if rates come down. Still like some areas of tech, specifically software, you'll always see that in the portfolio, because that's where growth is. And then industrials. Decreasing rate environment and subdued inflation and the on-shoring of North America is going to be good for industrials.
With that, that's about all I have to say. Happy New Year and I hope everybody has a good winter. It seems to be getting the Arctic blast now so. Bye.
Jason Isaac is a Portfolio Manager, with Cumberland Investment Counsel Inc. (CIC). CIC is the sub-advisor to its affiliate, NCM Asset Management Ltd. The information in this video is current as of January 8, 2024 but is subject to change. The contents of this video (including facts, opinions, descriptions of or references to, products or securities) are for informational purposes only and are not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard. The communication may contain forward-looking statements which are not guarantees of future performance. Forward-looking statements involve inherent risk and uncertainties, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
Jason Isaac, CAIA, CFA
Portfolio Manager, Global Equity - Cumberland Investment Counsel Inc. An affiliate of NCM Asset Management