Quarterly Briefing

Rebalance Update
Last quarter’s rebalance saw Dynamic portfolios generally reallocating from U.S. large-cap equities to short-term bonds and emerging market stocks. As we gear up for the fourth quarter rebalance, we may see more of the same as U.S. large and small companies continue to rally, while higher quality fixed income and emerging markets struggle.

Top Client Concerns
Investors may have many concerns in the current market environment. Dynamic has a wide variety of solutions to help meet client needs. Here are a few client scenarios and solutions:

Client 1: “The market continues to trade at all time highs and now there’s a spike in volatility. I’m worried about a market correction. Should I be going to cash?”

Solution for Market Fear: Dynamic Defensive Portfolios. Dynamic has different styles of ETF strategies to meet client needs based on where
a client may be in their life cycle or based on their willingness to take on risk. The Defensive strategy may be well suited for those clients nearing retirement and looking for more stability, or clients with a strong aversion to risk, but still needing to maintain a certain level of growth to meet retirement goals. Dynamic utilizes a unique investment in the Defensive portfolio called the Buffer Protection Strategy. It helps investors maintain a level of protection in down markets while taking advantage of growth opportunities in up markets. The portfolio also includes a fund investing in companies which have grown dividends consistently for the past 20 years, resulting in higher quality companies better able to weather the storm of a market downturn. Clients with an extreme fear of the market may find solace by investing in Dynamic Defensive Portfolios.

Client 2: “I’m in retirement and need income, but rates are so low right now and I’m worried about rising rates. How can I attain my income needs?”

Solution for Income Needs: Dynamic Yield Focused Portfolios. While most Dynamic portfolios focus on enhancing returns at a given level of risk, the Yield Focused Portfolios are instead looking for higher yield at various risk levels. These portfolios are still invested in a well-diversified mix of equities and fixed income, but the allocations are tilted toward higher yielding securities. For example, the equity side is allocated more to high dividend paying stocks such as those within the utilities sector. The fixed income side is allocated to higher yielding bonds and floating rate loans. Additionally, it offers exposure to unique higher yielding asset classes such as REITs, preferred stocks and MLPs. As of June 30, the 12-month yield averaged close to 3% for the Yield Focused Portfolios, a welcomed sight for those interested in higher income generation in the current low-rate environment.