Inspire Portfolio Strategy Insights

Global & Select Strategy Performance

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1. All our Global (ETF-centric) and Select strategies outperformed their secular benchmarks for the quarter. The higher the allocation to equities, the better the relative performance. For the trailing 12-month period, both our Select and Global strategies posted fair absolute results ranging from 4.08% on the conservative side of the spectrum to 1.92% in the all-equity strategies. Despite positive absolute results, the strategies underperformed their respective benchmarks, with the Global strategies slightly outperforming the Select strategies.    
2. On the equity side, the strategies outperformed the MSCI World Index in the quarter primarily due to our overweight allocation to international equities as well as having no exposure to the Mega Cap US stocks that have dominated markets for the past two calendar years. For example, in our Global (ETF-centric) strategies, we experienced positive relative performance coming from WWJD up 5.75% and BIBL down 1.28%, versus -1.79% for the MSCI World for the quarter. PTL was down 3.33%, ISMD fell 8.79%, and FDLS down 4.32%, underperformed the index as well. We have been overweight international and US small cap for several years, and that positioning has been a headwind for our strategies. The winds are starting to shift back in our favor, and though there will be bumps along the way, we believe our differentiated portfolio construction (no Magnificent 7, overweight international, smaller cap tilt) will add value over the long term.  
3. Over the trailing 12-month period, the strategies have underperformed given our overweight to small-cap, mid-cap, and international equity, all of which underperformed. In addition, the lack of exposure to the large mega-cap stocks (due to our BRI screens) significantly detracted from results both in our Global and Select strategies.
4. On the fixed income side, the bond portion of the 70/30 strategies underperformed the Bloomberg US Aggregate Bond Total Return Index in the quarter by 0.84% given IBD’s shorter duration (3.90 versus 6.14 years) as interest rates fell across the maturity spectrum. Over the trailing 12 months, IBD posted strong total returns of 5.54%, and outperformed the Bloomberg US Aggregate Bond Total Return Index by 0.66%, again due to IBD’s shorter duration.

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Asset Class Model in the Spotlight: Inspire Emerging Markets

The Inspire Emerging Markets sleeve outperformed the MSCI Emerging Net TR Index by over 3.2% in the quarter with a performance of 6.13% vs the index return of 2.93%. The majority of the three-month outperformance was due to sector weights and stock selection vs the index within the Financials, Materials, and Utilities sectors. Over the trailing twelve months, however, the sleeve has underperformed dramatically with a return of -4.49% for the year vs. the benchmark returning 8.39%, due primarily to asset allocation with an overweight to Latin America and underweight to China.

Capital Market Returns

See quarterly review and commentary for more information.

Inspire ETF Returns

See quarterly review and commentary for more information.

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