MRM Commentary

Commentary

Monthly Investment Commentary

November 2020

      Great News

        As we go to print, Pfizer stuns experts with early data. The COVID vaccine is more than 90% effective.

        October was a challenging month for markets. The strong start to the month was offset by rising COVID-19 case counts, which led to a sell-off at month-end. The S&P 500 lost 2.66 percent in October, while the Nasdaq Composite declined by 2.26 percent. The Dow Jones Industrials Average (DJIA) suffered the largest decline, losing 4.52 percent.



      MRM NET COMPOSITE PORTFOLIO RESULTS (As of 10/31/2020)
      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

      Volatility
      This volatility came despite improving fundamentals during the month. According to Bloomberg Intelligence, as of October 30 with 63 percent of companies having reported results, the blended third-quarter earnings decline for the S&P 500 was at 10.7 percent. If earnings end the quarter at this level, it would be a much better result than the roughly 31 percent decline we saw in the second quarter. It would also be stronger than market estimates at the start of earnings season for a 21.5 percent decline. The better-than-expected results were widespread, with roughly 85 percent of companies showing earnings per share above expectations.

      MSCI
      Internationally, the story was much the same. The MSCI EAFE Index declined by 3.99 percent during the month. The pandemic’s international growth spooked investors, and announcements of new lockdowns across much of Europe highlighted the continued risks COVID-19 presents. Emerging markets, on the other hand, outperformed in October. The MSCI Emerging Markets Index returned a positive 2.08 percent for the month. Technicals for international stocks were mixed. The volatility at month-end caused the MSCI EAFE Index to end the month below its 200-day moving average for the first time in three months.

      Confidence
      Business confidence and spending has impressed. Business confidence, as measured by the Institute for Supply Management Composite index of manufacturer and service sector confidence, rose in September to its second-highest level since the pandemic hit. It now sits well above pre-pandemic levels, and there is evidence that rising confidence helped support faster business investment. Durable goods orders rose by more than expected, signaling strong business spending during the month. One area of notable strength was the housing market, which continues to be a bright spot in the ongoing economic recovery.

      MRM'S VIEW

      Although a period of uncertainty and volatility is likely, the economic recovery is expected to continue. Good news on the economic front may ease some of the negative impact and market turbulence caused by these rising risks. A well-diversified portfolio that matches investor goals and timelines remains the best path forward for most.

      Source: Commonwealth

      MRM model holdings as of September 30, 2020

      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 September 30, 2020. 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.

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