NorthCoast ETF Retirement Portfolios Stick With IVV
NorthCoast Asset Management’s ETF retirement portfolios are wrapping up 2014 with more gains. In November, U.S. equity positions have kept their momentum as leading indicators pointed to a strengthening economy in the U.S.. Foreign holdings have also been on the move as stimulus strategies in Japan and Europe have provided optimism overseas.
Here are some highlights for the month.
The iShares Core S&P 500 ETF (ARCA:IVV) remained a top holding in three of the portfolios. The conviction has paid off as IVV once again broke into record territory. The climb was driven by healthy earnings and a promising macroeconomic backdrop.
“The U.S. economy has been supported by an improving job market,” said Patrick Jamin, chief investment officer for NorthCoast. “It has been growing at a pace of 225,000 jobs per month.”
IVV had risen 2.98% during the month going into Friday and was up 14.15 on the year.
Jamin sees declining oil prices as an added plus for U.S. companies. “It will result in lower energy costs,” he said of the trend. “We see this as a gift from OPEC that will translate into another stimulus.”
The decision by the NorthCoast team to increase its iShares Core S&P Mid Cap ETF (ARCA:IJH) positions in October had an immediate payoff in November. IJH shares spiked 2.7% during the month and were up 9.67% so far this year.
Fixed Income Plays
Heading into November, the iShares National AMT-Free Muni Bond ETF (ARCA:MUB) had enjoyed a steady climb for much of the year. NorthCoast exited the holding with a packed slate of bond sales set to close out 2014. “Municipalities can now issue debt at pretty attractive spreads,” Jamin said. “We believe there could be an even better entry point after all of these issuances. It’s a position for us to think about adding, to slowly decrease the risk in the portfolio if the market rally continues at this pace.”
Shares of MUB were down 0.22% for the month.
In recent weeks NorthCoast has added the iShares 10+ Year Credit Bond ETF (ARCA:CLY) to its holdings. “We’ve initiated a position in CLY in all of our portfolios,” Jamin said. “With the economy in growth mode we believe credit bonds are more desirable than government bonds.”
Global Stimulus Efforts
NorthCoast tweaked its exposure to Europe and Japan by closing its positions in the iShares MSCI EAFE ETF (ARCA:EFA), picking up the iShares MSCI EMU ETF (ARCA:EZU) and upping its stakes in iShares MSCI Japan ETF (ARCA:EWJ).
Stimulus efforts in both regions grabbed the spotlight in November. Shinzo Abe postponed a sales tax hike in Japan, while Mario Draghi reiterated his pledge to achieve healthy inflation for the Eurozone. “The delay of the sales tax in Japan is very welcomed news,” Jamin said. “The weakening of the yen will also help boost Japanese exports and increase corporate profits.”
Jamin also added the iShares MSCI Pacific ex Japan ETF (ARCA:EPP) in November.