MRM Commentary


Monthly Investment Commentary

September 2023

      Another Weak August

              In recent years, August has had a reputation as a weak month for stocks. Since 1986, August stock market performance has ranked as the lowest of all 12 months, returning on average a negative 0.8 percent. The August 2023 weakness mirrored historical experience, so the declines seen the past month did not surprise many market analysts, especially given that the market was perhaps due for some consolidation following the strong performance through the first seven months of the year.

      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

      Global stock and bond markets declined in August as stronger-than-expected economic data stoked fears the U.S. Federal Reserve (Fed) would continue its path of interest rate hikes. Losses were broad-based with almost every sector of the S&P 500 Index, except energy, declining. Disappointing economic growth out of China compounded stock investor concerns and resulted in emerging market stocks underperforming their developed market peers.

      The Bloomberg U.S. Aggregate Bond Index declined as the yield on the 10-year U.S. Treasury touched its highest level since late 2007. Larger than usual issuance following the debt ceiling deal, as well as surprisingly resilient economic growth, have helped push yields higher. Despite the broad index declines for the month, U.S. corporate high yield bonds eked out modest gains.

      The U.S. unemployment rate spiked higher from 3.5% to 3.8% due to a significant uptick in the number of people looking for work. The Conference Board Leading Economic Index posted its sixteenth consecutive monthly decline and is currently signaling that a recession may be on the horizon. Meanwhile the Fed’s Coincident Economic Index is showing improvements, indicating current strength in the economy. Consumers continue to exhibit resiliency, with personal spending rising 0.8% in July.

      According to FactSet, corporate earnings per share (EPS) declined by 4.1% for the second quarter of 2023 with just 79% of companies in the S&P 500 Index reporting a positive earnings surprise. EPS growth is expected to rise in the third quarter of 2023 by 0.5%. Stock valuations remain above the long-term average with analysts forecasting EPS growth for all of 2023 to be above 1%.

      MRM'S VIEW

      The U.S. economy continues to exhibit resilience as the Fed attempts to engineer a soft landing in its battle against inflation. In the face of economic strength, more economists are backing off their recession calls, despite signs from the Fed that more rate hikes may be necessary to tame inflation.

      Source: MassMutual/MVT

      MRM model holdings as of June 30, 2023



      MRM Group, Inc. (“MRM”) is a state-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.


      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.


      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.


      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, 2023. 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.

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