Staying Focused Amid Market Volatility
New policy announcements and shifting economic conditions have kept our collective heads on a swivel. The U.S. economy entered the year with strong fundamentals, including moderating inflation, a robust job market, healthy consumer spending, and solid corporate earnings. However, as we review data for the first quarter, the outlook is becoming more mixed.
While these positive economic undercurrents remain, they are overshadowed by negative consumer sentiment and concerns over potential economic drag from newly announced tariffs. Tariff policies have dominated headlines and could weigh on domestic growth, but it is important to recognize we still lack the full policy picture. Key areas, such as tax policy, deregulation, and the federal budget, are still taking shape. As these elements come into focus, we remain patient, knowing a clearer policy landscape will emerge in time.
Market Update and Perspective
Recent uncertainties have contributed to weaker market sentiment and declines in domestic equities. The S&P 500 and NASDAQ, which each delivered over 20% gains in the past two years, are currently down approximately -5.5% and -9.5% year-to-date respectively, as of this writing (Source: Bloomberg 03/11/2025). However, on a trailing 12-month basis, both indices remain up about 8.5% (Source: Bloomberg 03/11/2025).
Coming into 2025, we anticipated a more tempered year for equities given valuation concerns for some of the largest publicly traded companies. While short-term market fluctuations can be unsettling, Acumen portfolios are intentionally structured to navigate various market environments.
What does this mean for client portfolios?
Our Intentional Approach
1. Strategic Asset Allocation
We take a long-term approach, tailoring the mix of equities and fixed income to align with each client’s unique needs and risk tolerance.
2. Quality-First Equity Selection
Acumen focuses on investing in high-quality companies with strong balance sheets and experienced management teams. The foundation of our equity portfolios is our core equity holdings. This strategy is designed to reduce volatility relative to a passive, broad-market approach.
We recently hosted a client event with our partners at GMO in Boston discussing our quality-first philosophy. We encourage you to watch or listen to what was discussed (below) if you missed the event.
3. Tactical Rebalancing Risk Management
We systematically rebalance portfolios, selling positions that have outperformed and reinvesting those proceeds into positions that have sold off and become more attractive as a result. This ensures alignment with long-term investment objectives and helps manage portfolio risk organically.
Staying the Course
While market volatility and policy uncertainty can be unsettling, we remain committed to a disciplined, intentional investment approach. Acumen’s portfolios are built for varying market conditions, and we continue to focus on long-term growth, risk management, and high-quality investments.