Hortz: Any last advice you can share with advisors on how to navigate the markets from your economic and ETF landscape knowledge?
Stein: We at Astor are keeping a very close watch on stock market movements and economic data in real time—as we always do. By using ETFs, we can create portfolios that give investors specific exposure to asset classes that our models suggest. We can reduce, increase and even create exposure that once could only be achieved with stocks which made it challenging to express a broader opinion on the economy or specific sectors in the economy. Now because of the plethora of ETF choices Astor, as well as other asset managers, can be nimbler and more mindful of other opportunities.
Eckstein: As to the economic backdrop, while moderating a bit, it is not exhibiting recessionary indications. Nonetheless, trade wars, the Fed and its interest rate policies and other political issues (domestic and abroad) have created an environment of uncertainty for investors, which the market does not like!
While the economic data gives an assessment of an economy that continues to grow, albeit more slowly than in the past, we know that there will eventually come a time when active managers may get defensive. If/when that happens, bear markets in the broad indices may become more aggressive because of the recent trend toward widespread passive holdings. My belief is that too many assets are in passive investments that have similar behavior. To that end, it will magnify the losses if/when the economy is growing below trend or contracting.
We believe the research behind the Astor Economic Index is so powerful in navigating the market that we’ve made it available to all financial professionals. We are happy to share with advisors our ongoing research and monthly results of our Index’s read on the US economy which is available on the Insights page of our website.
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