4th Quarter 2022 Summary of Model Changes


The growth models continue to be 100% equities.  Although an impending recession would be difficult, the growth models are long-term portfolios placing emphasis on potential long-term returns over short-term volatility.  A small reposition of the large cap equities included a position in a large cap blend fund focusing on defensive stocks.  The moderate and conservative models saw multiple trades to diversify the bond position in the portfolio, specifically to extend the duration.  Over the last 6 months, the models have been overweight ultra-short duration and short-duration bond funds.  Moving forward, the addition of a long-term bond fund seems prudent, if interest rate risk is reduced combined with higher yields.  A new floating rate fund further diversifies the fixed income holding in the moderate and conservative portfolios.  With the Barclay’s Ag dropping a historic 15.3% in 2022, repositing of fixed income allocation to focus on increasing the duration of the models, should allow the conservative and moderate portfolio to better capture a turnaround in bonds moving forward, albeit at increased potential volatility.





Traditional Models

Growth Portfolio

Equities: Increase allocation to US large cap stocks in favor of US mid cap, US small cap, and emerging markets stocks.  Overweight value to growth.  

 In anticipation of potential   recessionary environment,   enhanced position to dividend   paying, large cap equities,   reducing growth equities.   Continue with overweight growth   in mid/small cap space.

Moderate Portfolio

Equities:  Increase allocation to US large cap equities in favor of US mid cap, US small cap, and emerging markets.  Tilt to value over growth.  Added a large cap Blend position, using a fund focusing of defensive stocks, specifically consumer staples. 

Fixed Income: Added a long-term bond index and a core plus intermediate bond fund, by selling ultra-short bond fund and high yield fund.  Added a floating rate fund.

 Equities: Same rationale as the   growth portfolio.  New large cap   blend fund is a defensive   position in anticipation of   recession.  Historically defensive   stocks fare better during   recession over growth stocks.   

 Fixed Income:  Increase the   duration in the model by   diversifying core holdings away   from short term bonds,   anticipation that bond prices do   not have much further to fall.     Diversification across types of   bonds with addition of floating   rate, while maintaining position   in TIPS.

Conservative Portfolio

Equites: Added large cap core position, with focus on defensive stocks.  Overweight large cap to small and mid-cap, overweight to value over growth. 

Fixed Income: Addition of long-term bond index and core plus intermediate bond fund by selling short duration and high-yield funds.

 Equities: The same rationale as   moderate portfolio. 

 Fixed Income: Increase in   duration of bond portfolio,   similar to moderate model.   Positioning in bond fund   portfolio toward lower interest   rate risk and higher credit risk. 




Stewardship Models


Equities: Addition of large cap value fund.  Tilt toward large cap over small and mid cap

 Equities: Diversification of large   cap equities for potential   recessionary environment. 

Moderate Portfolio

Equities: Same as growth model.  Tilt to large cap over mid and small with preference of value over growth.

Fixed Income:  Inclusion of long-term bond index, core plus intermediate bond fund.  Added floating rate bond fund.  Replaced multi-strategy fund.

 Equities:  Position equities to   dividend paying equites,   especially in large cap to provide   support if recission begins. 

  Fixed Income:  Increase in   duration of bond funds,   anticipating increase in credit   risk and decrease in interest rate   risk.  Multi-strategy fund was   replaced, as it did not score 0 on   moral screen for abortion,   lifestyle, pornography,   entertainment, and human rights.

Conservative Portfolio

Equites: Same as moderate position above. 

Fixed Income: Same as moderate position above.  Reduction in TIPS in favor of long-term government bond fund. 

 Equities: Same as moderate   above.

 Fixed Income: Same as moderate   above.