Co-Founders' Monthly Note For Financial Advisors

June 2024:

Trend Following’s Response To Delayed Rate Cuts

We believe a significant advantage of trend following is its ability to help financial advisors manage clients’ emotions and behaviors by providing a clear, adaptable plan for any market scenario.

This systematic investing strategy aims to generate alpha through investment returns, but also to maintain discipline and consistency in the face of market fluctuations. In our view, trend following excels at managing market outliers — those rare, unpredictable events that can significantly impact performance. For example, NVIDA’s market cap has reached $2.6 trillion, $890 billion higher than all the companies in the S&P 500 Energy sector combined. Such unprecedented events underscore the need for a robust plan for navigating these exceptional occurrences.

Last month we discussed the tendency of markets to experience downturns and how trend following often takes a wait-and-see approach during small declines. Like we discussed could happen, April’s U.S. equity market declines were erased in May, as the market bounced back and set new all-time highs. This illustrates that trend following is less about predicting outcomes and more about maintaining a disciplined process. This investing approach enables decisive action without second-guessing, which we think is a significant advantage for financial advisors managing multiple clients and services.

In this month’s Co-Founders’ Note, we discuss our continued wait-and-see approach in fixed income, which has been significantly affected by what’s been happening — or not happening — with interest rates. Despite predictions of cuts in 2024, higher rates have persisted. Trend followers like Blueprint Investment Partners have navigated this uncertainty by adhering to our rules, which has allowed us to benefit from the high yields of short-duration instruments.

But first, here’s a summary of our take on what transpired in the markets in May.

This Month's Note

Asset Allocation Monthly Update

Asset allocation changes for Blueprint's global risk-managed portfolios

ESG Monthly Summary

Asset allocation changes for the risk-managed Blueprint U.S. ESG Strategy

Archive: Co-Founders' Notes

May 2024

Don’t Underestimate the Value Of ‘Wait & See’

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April 2024

Shouldn’t We Be Enjoying this Ride?

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March 2024

Mistakes of Omission Are More Costly Than Bad Investments

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February 2024

The Impact of Short Term, Incremental Improvements On Long-Term Success

Read More