December 4, 2017
To: All Clients in the Multi-Asset Strategy – Growth Model
Below is our Rationale of the recent change we made in the Multi-Asset Strategy – Growth Model:
RATIONALE
In the Growth Model only of the Multi-Asset Strategy we are selling Dodge and Cox Balanced Fund (DODBX) and buying Double Line Shiller Enhanced CAPE fund (DSEEX). This move is a combination of replacing a position to reduce exposure to bonds in a rising rate environment and to have a position in the Growth Model that has proven to us to be worthy in a significant way. Double Line Shiller Enhanced CAPE fund has outperformed the S&P 500 every year since its inception in 2013. It has done this with approximately equal risk. Through November it has an average three year return of 13.9% vs.10.2% for the S&P 500 and 7.1% vs its Morningstar category of Large Value. This has placed it in the top 1% of its peers. This fund is managed by Robert Shiller the Yale University Nobel Prize winner in Economics. It invests in fixed income and bank loans and uses these instruments as collateral for the Shiller Barclay CAPE US Index. The CAPE Index takes five of the cheapest sectors in the S&P 500 out of ten based on relative CAPE ratios (which are Price/Earnings sensitive to find their measure of best value). It then drops the weakest sector netting four sectors for investment. The goal is to have a continuous exposure to a rotating group of the cheapest S&P 500 sectors.
Thank you.
Richard Rodman
Past Performance is No Guarantee of Future Results.
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