ResearchHow We Managed in a Risk-Off Month

How We Managed in a Risk-Off Month

Sep 12, 2023

Back in July, I made one important point - “we’re not so sure we’re out of the woods yet” (in terms of avoiding a major economic recession or market pullback) so we “remain positioned with some strategic cash.” 

Fast forward to today, and it seems that conservatism served us well in August.

All of our active equity strategies outperformed their benchmarks* thanks to a combination of (1) relatively strong individual stock performance and (2) our strategic cash holdings which buffered us from the full impact of the market’s decline. 

Here’s some more context:

1/ What Happened and Why: The S&P 500 and Nasdaq suffered their first monthly declines since February (-1.8% and -2.2%, respectively). This was due to a variety of factors - from concerns about stretched market sentiment and positioning to worries about China's economic growth.

2/ What We Did About It: In the face of these risk factors, we held more cash for clients. As you know, we’ve been in the “higher for longer” interest rates camp for a while now. This means we’ve been expecting higher bond yields than the market (which we anticipated would hurt stock prices), so when they arrived, we were prepared with strategic cash holdings to buffer against losses. We did not buy/add to any stocks in August, though we did sell/trim a few stocks (see Ebix/Consol Energy and Verra Mobility in Opportunities).

3/ The Path Forward:

  • No change to our views since last month. We remain cautiously optimistic with roughly ~80-85% net exposure across our active equity strategies, holding strategic cash as “dry powder” to capitalize on continued volatility. We feel great about our portfolios but few ideas on our watchlist are “screaming buys” right now, so we are staying patient.

  • We are waiting for confirmation of a hard vs. soft landing which we should get over the next few quarters as a few key catalysts unfold, such as the resumption of required student loan repayments. The resulting hard vs. soft landing will be a factor in determining the degree and speed with which we deploy vs. shore up our strategic cash.

  • Until then, we’ll continue to pick our spots as attractive bottom-up opportunities present themselves in individual stocks.

In case you’re looking for more, check out our first “Investment Committee” video from last week.

Beyond our active equity strategies, we’ve loved hearing the client feedback around Smart Cash which creates a seamless cash management experience for you at Titan. For your low-risk money, we have Smart Cash; for your growth capital we have our actively managed strategies. With rates at two decade highs, Smart Cash is yielding up to 5.30%* and serves as an excellent place for your rainy day fund.

If you have any questions for me or the team, just reply to this email and we’ll get back to you as soon as we can. Stay cool out there.

Best,

Clay

Co-CEO and Chief Investment Officer


Disclosures:

*Performance relative to benchmark assumes an ‘Aggressive’ risk profile. Clients with ‘Moderate’ or ‘Conservative’ risk profiles generally would have experienced lower returns.

**Yield is as of 9/08/23. This represents the highest 7-Day Yield currently available among our options. Certain funds have specific investment minimums, which can be up to $3,000. Investors who invest amounts below these minimums may experience lower yields than those advertised. Yields will fluctuate over time, and are not a forecast or guarantee of future earnings.

Titan Global Capital Management USA LLC ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Please refer to Titan's Program Brochure for important additional information. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck. Contact Titan at support@titan.com. This content is intended for informational purposes only. 

Performance for any Titan strategies as compared against the performance of Illustrative Benchmarks are also for informational purposes only. “Illustrative Benchmarks” include the Standard & Poor’s 500 Index (the “S&P 500”), the Russell 2000 Index (the "Russell 2000"), and the MSCI ACWI ex US ETF ("MSCI World ex-US"). Titan’s investment program and strategies do not mirror that of the Illustrative Benchmarks, and volatility may be materially different from the volatility included in any Illustrative Benchmarks. The Illustrative Benchmarks are calculated and distributed exclusively by third parties, and not by Titan, and thus Titan cannot guarantee the accuracy or completeness of the data. Reference or comparison to an Illustrative Benchmark does not imply that Titan’s portfolio or strategies will be constructed in the same way as the Illustrative Benchmark or achieve returns, volatility, or other results similar to those of the Illustrative Benchmark.

Titan's Smart Cash strives for tax optimization, but after-tax yields are estimates, and actual outcomes may vary. Yields are subject to market conditions and are not guaranteed. Smart Cash includes the Titan Cash Reserve and Treasury Fund offerings available on Titan, each with unique characteristics and risks. Please note, the 7-day yields of our Treasury Funds do not forecast future earnings. While Titan can provide general information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. Titan strongly recommends consulting with a qualified tax professional regarding your specific tax situation for personalized advice and compliance with tax laws. View Smart Cash Risks & Disclosures at titan.com/smart-cash-disclosures.

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Communications may contain forward-looking statements, which reflect our current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. References to specific stock performances are provided for historical context and are not indicative of future results. Valuation assessments in our communications are based on internal analysis and are for informational purposes only. They should not be the sole basis for investment decisions and may differ from others' views or assessments. No warranty is made regarding their accuracy or completeness.

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