Since last month’s issue, we’ve seen continued volatility in the U.S. equity markets.
Trading volume was among the slowest this year; according to Dow Jones Market Data Group, the typical daily volume in the New York Stock Exchange is close to 5 billion. However, this year, it has been around 4 billion.


The second-quarter earning session is just around the corner. Investors are eager to see how companies are contending with soaring inflation and other factors, including the U.S. labor market participation.

The S&P 500 is now in bear territory, which should not be particularly surprising to anyone.

The economy is slowing, inflation is high, war is still raging in Ukraine and China’s economy is not in good shape.



For investors, the trick is to not get discouraged about the current market, but instead, to seek opportunities to profit.



That’s exactly the point of the Undiscovered Portfolio (more about that below). If you’ve invested in that portfolio, you know we’ve been able to identify exchange-traded funds with higher probabilities of delivering positive returns in this market.

One key tenet of asset allocation is risk management. You’ll find that principle to be much more salient when it comes to investing an entire portfolio, as opposed to simply trading individual stocks.

That’s even more critical during a bout of market volatility, such as what we’re currently experiencing.



Sure, it’s possible and even desirable to diversify in a single-stock account. For example, you can potentially mitigate risk by owning stocks from various sectors, or at least sub-industries within a sector.



That’s exactly why ETFs serve a role as “instant diversifiers.” Because they track a basket of securities, you’ll generally smooth out performance to a larger degree than with a single-stock portfolio.

In this month’s issue, we focus on the smaller, and lesser known ETFs featured in the undiscovered portfolio.

While asset allocation is a tried-and-true method for longer-term investing, you can boost your return with ETF trading. That’s what the undiscovered portfolio is designed to do.



With market volatility remaining, this portfolio gives you an opportunity to capture excess returns from asset classes outperforming the broader market.

The situation with Russia’s invasion of Ukraine has added a fresh bout of volatility to the markets.

But U.S. markets, as tracked by the SPDR S&P 500 ETF Trust (SPY), have not plunged far. The SPY fell to an intraday low of 410.64 on February 24 before rallying to finish the session with a gain.



The truth is: Stocks were already toying with a correction prior to the Ukrainian situation heating up.

With the markets in a cyclical rally, rebounding from January lows, it’s an excellent time to review your ETF holdings to make sure you’re invested properly for the current market conditions.

In this issue of the Cabot ETF Strategist, you’ll find fully diversified portfolios tailored for aggressive, moderate and conservative risk tolerances.



We’ve also rolled out a tactical “undiscovered” portfolio consisting of smaller or lesser-known ETFs, allocated specifically to the current market cycle. This portfolio is designed to rotate more than a strategic allocation. You’ll be receiving alerts when a change is made here, or in one of the more traditional portfolios.



Use whichever portfolio matches your risk tolerance and goals. Happy investing!



Details inside.

Does your ETF portfolio look the same this year as it did in 2021, or even for the past five or 10 years?

With this first issue of the Cabot ETF Strategist, you’ll get the essential portfolio allocations to get the year started right. Whether you’re an aggressive, moderate or conservative investor, theres’s a portfolio for you.



Both equities and fixed-income asset classes are getting a slow start to the year. That’s good news for anyone rebalancing or reinvesting their portfolio, as you can buy ETFs at potentially lower valuations.

As market conditions continue to shift, with large-cap U.S. stocks resuming an uptrend in the past two weeks, we are once again making some changes within the tactical Undiscovered Portfolio.

As market conditions continue to shift, with large-cap U.S. stocks resuming an uptrend in the past two weeks, we are once again making some changes within the tactical Undiscovered Portfolio.

With this update, I’m giving you trades for rebalancing the Aggressive portfolio (100% equity) and the Moderate portfolio (60% equity/40% fixed income).

Any time the broad market declines 10% or more, into correction territory, it’s wise to evaluate your holdings and be sure nothing has strayed too far out of line from your predetermined allocation.

The three “strategic” portfolios, allocated according to aggressive, moderate, and conservative risk tolerances, trade less frequently, and are designed to help investors meet specific goals.

In today’s ETF Strategist update, I’ll answer two questions that came in this week. Here is a summary, and I go into further detail in the short podcast that accompanies this update.

In this week’s ETF Strategist update, I’ll continue answering questions I received after we launched this advisory.
In particular, a reader asked why the specific funds were included in the allocation.

In today’s ETF Strategist update, I’ll answer two questions that came in this week. Here is a summary, and I go into further detail in the short podcast that accompanies this update.

As you are aware from the prior issue and the last update, the Undiscovered Portfolio is tactical in nature, meaning that we’ll be buying and selling funds on a fairly regular basis, as market conditions change.

Today, the Undiscovered Portfolio sold three ETFs for the following reasons.

Cloudflare (NET) reported Q4 results yesterday that surpassed expectations. Revenue was up 54% to $193.6 million while adjusted EPS came in at $0.01. As compared to some other software stocks that have beat expectations, Cloudflare reinvested the surplus cash in growth initiatives, so it didn’t flow to the bottom line.