October 11, 2020

All investors face capital-market risk. Managing the risk, evaluating opportunities in the context of their goals, and assessing specific investments efficiently requires broad, objective, close-to-the-capital-market thinking. A global allocation framework does not need to be a black box that processes many statistical variables and then spits out an investment plan. It should be a logical framework that lays out choices for investors. The LJE process strives to accomplish these objectives. It summarizes in a logical and consistent way the investment choices recommended by our assessment of the coming economic environment. We take advantage of the modularity or additivity of our countries forecast in order to build different regional or stage of development indices. Our process equips investors with greater choices by building portfolios that emphasize different factors. The process affords the opportunity to invest at the regional level, stages of development or a combination of the two set of factors. The country allocations, within each of the indices, offers investors the opportunity to add value over and above the regional allocation benchmarks. The Year-to-Date Performance. The global tilt strategy with a 0.35% year to date decline, the global buy portfolio with a 5.09% gain outperformed the 1.03% decrease posted by the global benchmark. The global sell portfolio with an 8.78% loss underperformed the global benchmark as expected. The capitalization based international strategy is faring equally well. The 8.02% decline posted by the tilt strategy and the 6.67% decline of the buy portfolio outperformed the 8.31% loss posted by the international strategy. Again, in line with our forecast, the international sell portfolio with a 13.25% loss also underperformed its benchmark. As the year has progressed, the year to date results are validating one of our assertion that over time the relative cumulative performance will improve as the number of draws increases.

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