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Decreasing Correlation Increases Appeal of Multi-Asset Portfolios

Our current income portfolios: 

DFMAP (Dividend Focused Multi-Asset Portfolio) 
TAC (Treasuries Across the Curve)
VWI (Volatility Weighted Income): We have declared a monthly dividend of 4.23c to be paid 2/28. Note: we only pay dividends as received and February is a seasonally slow month for dividends. 

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Learn about VWI ETF

We have a busy media week ahead: we will be on Schwab Network on Monday 2/26 at 305p to discuss correlation in multi-asset portfolios (topic of our weekly) and on the ETF Prime podcast with Nate Geraci on Tuesday 2/27 to discuss our risk-adjusted portfolio process and VWI. 

Multi-asset portfolios (such as 60/40) are designed to provide investors with market exposure with reduced volatility. When assets are negatively correlated, such as stocks and long-dated government bonds over long periods of time, a portfolio provides superior risk-adjusted returns. The goal is not capturing every last dollar of possible total return but rather risk-adjusted returns.

We discussed the recent correlation trends between SPY (large cap equities) and TLT (long-dated government bonds) two weeks ago and noted the de-correlation YTD in 2024. This trend has continued over the last two weeks with strong interest in AI driving equities higher while the bond market treads water and now pricing in closer to 3 cuts this year. We believe multi-asset portfolios look increasingly attractive in this environment.

Our key points are below:

As always your thoughts and feedback are very much appreciated!


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