MRM Commentary

Commentary

Monthly Investment Commentary

September 2021

      THE MARKETS

            • While we expect growth to remain strong, the rise of the delta variant and supply-chain disruptions are creating some headwinds for growth.
            • As a result, the street has lowered gross domestic product (GDP) growth expectations for the U.S. and global economies.



      MRM NET COMPOSITE PORTFOLIO RESULTS (As of 8/31/2021)
      MRM Group claims compliance with the Global Investment Performance Standards (GIPS®).
      Please contact MRM Group to obtain a Compliant Presentation and/or MRM's list of Composite descriptions.

      MRM Portfolio

      Delta Variant
      The current rise in the delta variant, as was the case with previous stages of the pandemic, has made predicting the economy, and many other market variables, more difficult than has been the case in most past cycles. Instead of a gradual slowdown in economic growth, the pandemic led to a sudden lockdown of economic activity. We have slowly climbed out of the hole over the last 15 months, and our work suggests the sun will continue to shine on the economic recovery at least through next year.

      Monetary
      Massive monetary and fiscal stimulus have also played a big role in the speed of the recovery. This has been the case on a global basis as every major central bank on the planet has implemented monetary policies intended to pump stimulus into their economies. We expect the U.S. economy to lead the world economic recovery in the near term but look for some catchup from other major economies and regions as we move into and through 2022.

      Demand
      Consumer demand remains strong, but global supply-chain disruptions have led to shortages of many raw materials, parts, and finished goods. In addition, labor shortages here at home have been a headwind for the services segment of the domestic economy. These supply-chain disruptions have not allowed companies to build inventories, which has also slowed growth. The rise in the delta variant has also created speedbumps for the global recovery, but we do not believe it will lead to the same level of lockdowns as was the case last year.

      Growth
      While we expect economic growth to remain well above average this year and next, our expectations for 7% growth this year now appears too optimistic. As a result, our gross domestic product (GDP) growth estimate has been lowered to 6.3%, still strong by historical standards. We are retaining our 5.5% or 6% growth estimate for 2022 as we expect supply-chain disruptions to ease and the global economy to be more synchronized. We see global GDP growth coming in at 5.6%. The global aspect of this recovery is highlighted by the fact that nearly 40% of the revenues for the S&P 500 Index come from outside the U.S. We see the U.S. recovery shifting from short and explosive to a more persistent and that will carry us through the end of next year at least.

      MRM'S VIEW

      Overall, we see a more sustainable recovery that is built on consumer spending and inventory rebuilding taking hold in coming quarters and carrying the economy forward through 2022. We remain bullish.

      Source: Mercer

      MRM model holdings as of June 30, 2021

      Allocations

      IMPORTANT DISCLOSURES

      MRM Group, Inc. (“MRM”) is an SEC registered investment advisor and an independent management firm that is not affiliated with any parent organization. Using quantitative selection methods, each MRM strategy searches within a well-defined universe of securities, using consistent investment criteria to identify attractive investments and create diversified portfolios. MRM seeks to provide long-term capital growth.

      Allocations

      The portfolios do NOT use inverse or leveraged ETFs. Universe vehicles may change, from time to time, when approved by the principal of MRM Asset Allocation Group at its sole discretion.

      BENCHMARK NOTES

      Effective Nov. 1, 2016 the Dynamic Overlay benchmark was changed to Morningstar’s Tactical Allocation. The benchmark was applied retroactively to the beginning of the performance period, January 1, 2008. This change had the net effect of placing the Dynamic Overlay Model Portfolio in a more favorable light than would otherwise have been the case if we used the blended benchmark described below. Although this change had a favorable impact on the comparative effect on the model’s performance but we believe the change in benchmark more appropriately aligns with our Dynamic Overlay Strategy in that it is designed a tactical allocation rather than a static blended benchmark of 75% S&P 500 Index Total Return and 25% MSCI EAFE. Morningstar’s Tactical Allocation Category averages returns for the peer group based on the return of each fund within the group, for the period shown. The S&P 500 Index with dividends is an unmanaged composite of 500 large-capitalization companies whose data is obtained from the Standard & Poor’s website. S&P 500 is a registered trademark of McGraw-Hill, Inc. The MSCI EAFE Gross Index is a free float–adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada, with data from the MSCI website using price with reinvestment of dividends. The performance of blended benchmarks is shown for comparison because MRM uses securities which track indices related to these products. The Dow Jones US Select Dividend Index comprises 100 stocks and aims to represent the U.S.’s leading stocks by dividend yield. An investment cannot be made directly into an index.

      DISCLOSURES

      MRM Group claims compliance with the Global Investment Performance Standards (GIPS®). MRM has been independently verified for the periods January 1, 2008 through June 30, 2021. The verification report is available upon request. Verification assesses whether (1) MRM has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) MRM’s policies and procedures are designed to calculate the present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

      Valuations are computed and performance is reported in U.S. dollars. Client performance may differ based upon the structure of a particular investment program. For example, some programs are structured as wrap fee programs in which trading costs and brokerage commissions are included in one all-inclusive wrapped fee. As such, these costs may be higher than if the client were to pay trading costs and brokerage commissions separately. The standard management fee is 2.0%. Deviation from the model’s diversified structure may result in different risk, return, and diversification characteristics and would therefore not be representative of the models.

      All information contained herein is for informational purposes only. This is not a solicitation to offer investment advice in any state where it would be unlawful. There is no assurance that this platform will produce profitable returns or that any account will have results similar to those of the platform. Past performance is not a guarantee of future results. You may lose money. Factors impacting client returns include individual client risk tolerance, restrictions client may place on the account, investment objectives, choice of broker/dealer or custodians, as well as other factors. Any particular client’s account performance may vary substantially from the program results due to, among other things, commission, timing of order entry, or the manner in which the trades are executed. The investment return and principal value of an investment will fluctuate dramatically, and an investor’s equity, when liquidated, may be worth more or less than the original cost. Investors should consider the investment objective, risks, charges, and expenses carefully prior to investing.

      Investors should not rely on charts and graphs alone when making investing decisions. Investments in securities of non-US issuers involve investment risks different from those of U.S. issuers, including currency risks, political, social, and economic risks. Net-of-fees returns are presented after advisor, management, custodial and trading expenses. The net of fee returns are calculated using actual management fees. The actual fees charged vary and range from .5% to 2.2%, depending on the size of the account and the custodian.

      If you wish to modify or impose reasonable restrictions concerning the management of your account, or if your financial situation, investment objectives, or risk tolerance have changed, please contact your MRM Group investment advisor representative or contact the Manager at (800) 233-1944. We will contact you at least annually to determine if your investment goals, objectives, and risk tolerance have changed.

      All MRM platforms are suitable for long term investing. Please read the fact sheets and disclosures for each platform carefully before investing.

MRM's website provides in certain places information obtained from outside sources or other website addresses or links. The outside information, or any other website information or links, including market and price information, and any other information from outside sources, contains information maintained or provided by institutions or organizations that are independent from the MRM and MRM Entities. MRM does not approve, recommend or have any control over these unaffiliated entities. MRM cannot guarantee or assume any responsibility for the accuracy or completeness of any information provided by any outside organization or entity, and such information is not considered content or images contained on MRM's website. MRM recommends that a user independently review or verify any information provided by any outside source available on MRM's website before acting or relying on such information. If users click on any third party link, any transactions undertaken or information users submit will be subject to the privacy policy of the third party's website(s). For more information, see the resulting third party's privacy policy.