Anthony (Tony) Winkels holds an MBA from The Wharton School of the University of Pennsylvania, and is Managing Partner at Fortis Wealth Management

Relative Asset Class Valuations and Tactical Allocation

Relative Asset Class Valuations and Tactical Allocation

Anthony Winkels of Fortis Wealth Management Writes on Relative Asset Class Valuations and Tactical Allocation

When asset classes like stocks, bonds, and real estate deliver markedly different returns over a given period of time, it may be beneficial for investors to tactically rotate from a relatively more expensive asset class to a relatively less expensive one. 

The broad higher price movement of equities since April 2020 has resulted in stock valuations that are near historic highs in terms of projected earnings.  In contrast, bond valuations are much lower from the perspective of historical context. 

As this article notes, “investment-grade bonds have been more expensive [than they currently are] almost half the time since the ICE index started in 1996, and junk bonds have been more expensive almost two-thirds of the time.”  Keep in mind that historically lower valuations may reflect elevated risk. 

Investors can employ tactical rotation by rebalancing their portfolios to realign respective asset class weights with baseline allocation targets.

Read more on this subject here

- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management

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