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Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here. |
The last time our spotlight was on this bonus chart, The National Association of Active Asset Managers (NAAIM) showed a strong inclination toward a hefty equity allocation, hovering around 93%. When it reached the full 100%, equities adjusted with a slight correction, right on cue. Historically, active managers leaning heavily into equities has been viewed as a contrarian indicator. The bullish trajectory in 2023 seems primarily driven by systematic flows, with further evidence to be showcased in our upcoming CTA models. Like our ranges, we pay special attention when any data reaches extremes; the NAAIM tends to oscillate between 100% equity exposure on the high side and 40% on the low. Presently, we're in the 70% bracket.
Active managers are constantly navigating the equilibrium of risk and reward in the stock market, fine-tuning their strategies to align with market pulses. The NAAIM Exposure Index sheds light on the tactical adjustments these portfolio maestros have made in the past fortnight.
Broadly speaking, US household allocations remain deeply entrenched in domestic equities, narrowly trailing the peaks of 2000 and 2021. Historically, such a stance has hinted at bearish prospects for upcoming equity performance. Yet, recent years have defied this traditional trajectory. If a "new bull market" emerges from this foundation, it'll be one for the history books.
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Learn more about the Market Situation Report written by Tier 1 Alpha. |
