Scott Wetherington, Chief Investment Officer for Adaptive Investments, spoke to VettaFi at Exchange back in February to discuss Adaptive’s suite of ETFs.
How Adaptive Has Adapted to the Market
Going over how Adaptive had been approaching the market environment, Wetherington said, “We run three tactical strategies, and those went risk on in December.” For Q1 and Q2, Wetherington expressed that Adaptive is looking for opportunities.
In discussing recession possibilities, Wetherington said, “the wildcard is the labor market.” He sees the strength of employment has giving the economy enough of a boost to fend off a recession for at least the first half of the year. Then, however, things could change. “Our view is, potentially into 2024, is when we start seeing the contraction and a really heavy recession.” According to Wetherington, a moderate to severe recession seems likely at that juncture.
Where to Find Opportunities
Adaptive sees opportunity in the fixed income space. “During the correction last year we thought those credit spreads were cheap enough to give us [an opportunity to have]a good entry point in those asset classes.” Wetherington cautioned that these trades were on a short leash, and that if things get “wobbly” in Q3 or Q4, there needs to be an exit strategy.
Asked about investment principles, Wetherington shared, “Don’t let emotions guide your process.” He stretched the importance of discipline and rationality, noting that last year was the perfect example of why discipline matters. “We were really happy with our performance. Our smart portfolios beat all our benchmarks.”