“They key thing would be we want to always continually get and stay invested,” said Azzarello. “And there’s ways to do that which make sense after a 10-year bull (market) so this doesn’t have to be cash on the sidelines or all into the market.”
“Rates going up is a good thing,” said Azzarello. “I know it doesn’t feel that way when fixed-income returns are going negative. However, at some point, we are going to benefit from some more income in the fixed-income market and it’s something that just has to happen.”
A Defensive Multi-Factor Approach
As the capital markets delve deeper into the late cycle and possibly into a corrective state if they haven’t already, Dahya believes that using a multi-factor approach combined with a defensive strategy is the best course of action moving forward.
“We take a multi-factor approach,” said Dahya. “From our point of view, factor timing is very difficult.”
“For most investors, just having a balance is enough,” Dahya said. “Value, quality and momentum–those are return enhancers in the portfolio–those should help you outperform by buying better stocks. The defense though, I think, is critical right now, which is maybe we should lean away from concentration and have more balance across sectors and stocks so they’re not taking very outsized bets.”
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