The first quarter was trying one for many investors as both stocks and bonds lost ground. Importantly, the Vanguard fund VBIAX, a representative 60/40 fund, lost over five and a half percent.
Of course, one should never place too much weight on the performance of one quarter. It is hard, however, to not appreciate the prescience of my statement just three months ago that “the notion of a 60/40 index as being ‘safe’ is going to get sorely tested”. Here we are.
In short, the conventional balanced fund did just what I expected and lost ground. At the same time, the All-Terrain allocation strategy did just what it was designed to do: It was largely insulated from overvalued stocks and bonds and at the same time benefitted from gold and other less conventional investments.
The good news for Areté is that I don’t expect the underlying conditions that produced these results to resolve any time soon. In fact, I strongly suspect these investment “winds” will be blowing for quite some time. The current forces took years and years to accumulate and will also take years and years to unwind.
This is all very, very good for Areté. The new investment strategy and value proposition are sound and the landscape is unfolding in a way that really plays to the strengths of the strategy.
As a result, I am expanding efforts to increase awareness and to market the All-Terrain strategy more aggressively than I have done since Areté’s launch almost fifteen years ago.
Part of that effort is to reach out to friends and acquaintances. I recently refreshed the website to highlight the All-Terrain strategy and if you haven’t checked it out recently, I encourage you to do so at https://www.areteam.com/.
One type of situation that tends to work well is when someone has some assets or a particular account that just isn’t managed very actively. Oftentimes people end up with stray retirement accounts, for example, that could use more direct oversight.
Another type of situation that can work well is when investors want to re-allocate assets among advisors. Many investors have done well with advisors who maintained large allocations to stocks the last several years but are having a hard time adapting to the new environment. If so, it may be time to consider moving some assets.
Finally, it’s probably also a good time to reflect back on the “Observations” newsletter I started up on Substack in response to the turmoil arising from pandemic lockdowns in early 2020.
The letter is still going strong and I am extremely pleased how the effort has imposed more discipline on my strategic thinking and also facilitated regular communication with investors. If there is one thing that really distinguishes Areté from other advisors, it is this kind of consistent, thoughtful, personal communication.
As always, thanks for your support!
David Robertson, CFA
CEO and founder, Areté Asset Management