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Market Research - January 24, 2018

Addressing 2018 Market Concerns

After experiencing one of the best years in the stock market in 2017, many investors question what’s in store for the markets in the upcoming year. The conversations — specifically amongst investment advisors — have switched from concerns about the Department of Labor (DOL) Fiduciary Rule, robo-advisors, and compliance to broader market concerns. While we cannot predict the future, there are ways advisors can better position themselves to make smarter investment decisions in 2018. To accomplish this, we recommend you watch our latest webinar, “Addressing 2018 Market Concerns Using YCharts.” For a summary, simply read on.

At YCharts, we chat daily with our customers and prospective clients, which are largely made up of institutional and retail investors. Listening to customer feedback, we compiled a list of the most commonly heard concerns for 2018:

  1. Assessing risk and positioning portfolios to perform in different market conditions
  2. Evaluating fund manager performance in past markets
  3. Monitoring leading indicators to help better time strategy changes
  4. Presenting strategies to clients or prospects, highlighting the preventive measures taken to protect them

Using the YCharts Fundamental Charting Tool

Using YCharts, quickly and easily visualize any facet of the market. The 10–2 treasury spread shows roughly 20 years of data, from 1996 to 2018. Further analyzing, add in the recession periods to visualize how the 10–2 Treasury Rate has gone negative just prior to the past two recessions.

Turning our focus to US Consumer Sentiment, we are able to highlight consumer sentiment versus the level of the S&P 500 Total Return Index. Using YCharts, you can visualize how US Consumer Sentiment drastically dipped prior to the last two recession periods.

To address the performance of different asset classes during the past two recessions, you can quickly compare two fixed income indexes and two equity-based indexes. YCharts enables you to easily visualize the stability of the fixed income assets throughout the two most recent recessions.

Assessing Past Manager Performance

Using the YCharts Fund Screener, easily analyze holdings to assess risk within a portfolio. To further analyze your results, add a custom Scoring Model. Our custom Scoring Model focuses on limiting downside risk and gives “Max Drawdown” a 50% weight, “Historical Sharpe (10Y)” a 25% weight, and “10-Year Downside” a 25% weight. Within the Fund Screener, since we’re looking for additional risk, we add a Metric Column, which displays funds whose managers were in place during the last recession.

Within YCharts, modify a fund universe to apply a “screen within a screen.” The result? You can pull multiple different types of funds by adding them to an existing universe. You can then add a Metric Filter to see if the current manager was around during the last recession. Pull this saved screen into the YCharts Fundamental Charting tool to compare your list with the total return level of the S&P 500 to find funds that performed well during the last recession under their current manager. To visualize how we pulled in saved screens and built out watchlists, watch the webinar here.

Taking Preventive Measures

Through YCharts Comp Tables, further analyze the risk within a portfolio’s holdings and determine which alerts to set to keep you updated. For additional preventive measures, you can create new Dashboard tabs, which allow you to have multiple dashboards within YCharts. Setting up a new alert is easy. Type in the search bar any one of YCharts’ 400,000 economic indicators. Select “Create an Alert” to customize how you want to see alerts and when you will receive them. Each watchlist allows you to quickly set up data tabs to keep a pulse on the downside metrics.

Use custom metrics to create an alert on YCharts

Addressing 2018 market concerns with YCharts is simple. As a company that is constantly working to meet the needs of clients, YCharts takes pride in sharing insights and enabling smarter investing for both retail and professional investors, in both bull and bear markets.

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