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Leuthold Core: A "Late Cycle" Buy
06/20/2018 5:00 am EST
It is a tactical asset allocation fund that typically emphasizes U.S. stocks but changes its portfolio with the markets.
It uses a range of technical indicators, including some proprietary tools, to decide how to change the allocation. The fund can invest in U.S. and foreign stocks and bonds, as well as cash.
Leuthold Core Investment also can hedge against a stock decline by selling short stocks or exchange-traded funds (ETFs) or using futures and options.
The fund substantially reduced its stock exposure during the course of 2018. It was invested 67% in U.S. stocks at the start of the year, and that position was down to a 40% net position by the end of the first quarter.
Rising interest rates also caused the fund to reduce its bond exposure to around 20%, which is among its lowest bond allocations since inception. The fund has about 7% in cash and 14.5% in hedging positions.
Leuthold Core Investment doesn’t think a bear market has begun and will increase its U.S. equity position if its indicators show the stock market is improving. But it believes we’re late in the cycle and the stock position is unlikely to return to 67%.
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