Quarterly Rebalance Review

Arbor recently completed its quarterly review and rebalancing of client portfolios.

Overall, the rebalancing trades sold stocks and purchased bonds to bring portfolios back to their targeted stock/bond allocations.  This is not surprising, given that stocks rallied strongly and outperformed bonds during the fourth quarter.

What was surprising was that the type of stocks being sold differed between our Global 1 and Global 2 strategies.

Both strategies require a 50/50 weighting of growth stocks relative to value stocks.  However, by design the stocks held in the Global 1 strategy are defensive

and the stocks held in the Global 2 strategy are more aggressive.  Put another way, Global 1 holds defensive growth and defensive value.  Global 2 holds aggressive growth and aggressive value.

Within Global 1, the stocks being sold to restore 50/50 balance were growth stocks.  This implies that defensive growth outperformed defensive value.

Within Global 2, the stocks being sold to restore 50/50 balance were value stocks.  This implies that aggressive value outperformed aggressive growth.

Putting all the stocks of the two strategies together in the Global 3 strategy, we saw sales of US defensive growth stocks and US aggressive value stocks with proceeds used to buy bonds and international stocks.

The next rebalancing is scheduled for the beginning of the second quarter. We look forward to sharing our review of the results with you in April. If you have any questions on your specific investments or accounts please reach out to set an appointment via email or phone, 630-701-9080.

Written by

Peter has more than 25 years of experience in the financial industry as a researcher, strategist, and portfolio manager.  As a portfolio manager at Arbor, Peter performs quantitative analysis on current and prospective portfolios.

Peter is a CFA charter holder.  He earned his PhD in Economics as well as dual Bachelors of Science degrees in Computer Science and Pure Mathematics from the University of California, Santa Barbara.

Before joining Arbor, Peter was a Founding Member of institutional money manager OakBrook Investments and worked there for 22 years serving in a variety of roles including portfolio manager, Director of Research, and co-Chief Investment Officer.  Prior to forming OakBrook, Peter worked at ANB Investment Management & Trust Company as a strategist, portfolio manager, and Head of Research.

Peter has lived in Lisle, Illinois since 1997.  Outside of work he enjoys sports car racing and is an active member of the Autobahn Country Club in Joliet, Illinois and the Sports Car Club America (SCCA).