The end of June, as the halfway point, is a good time to stop and reevaluate the assumptions you brought into the year. Are your strategies still working; and if not, what is your game plan for the second half of the year?

So with that in mind, let’s take a look at what I was saying in January:

You will see a handful of consistent themes across Sizemore Capital portfolios:

1) I am overweight Europe and emerging markets.

2) I am overweight dividend-paying U.S. equities.

3) I am underweight non-dividend-paying U.S. equities.

While I remain broadly bullish on U.S. equities in general, in my view they no longer offer compelling value. Looking overseas, I see much more attractive pricing and better opportunities for capital gains.

Europe, by and large, has not participated in the past five years’ worth of bull markets, and the continent is only now starting to emerge from its post-crisis, austerity-driven recession.

And most emerging markets, which collectively were a fantastic asset class for most of the 2000s, have traded sideways or down since 2011.

Finally, now that tapering by the U.S. Federal Reserve is well underway, I expect investors to reevaluate income securities. Dividend paying stocks and, particularly, “bond substitutes” such as REITs were dumped indiscriminately in 2013 as investors, terrified of what tapering might mean, sold first and asked questions later.

But as the reality sets in that inflation remains near generational lows and Fed tapering will be a slow process, I expect all yield-focused investments to enjoy a healthy rally in the first half of 2014.

For the most part, these were the right calls to make. U.S. stocks have performed a little better than I expected, but gains have been modest.  Bond yields have retreated, and “bond-like” REITs have enjoyed good returns.

Through June 27, the two most conservative holdings in Sizemore Capital’s Dividend Growth Portfolio—Realty Income (O) and National Retail Properties (NNN)—have performed well, even not including the value of dividends paid.

Emerging markets got off to a far rockier start than I expected due in no small part to a currency devaluation in Argentina, unrest in Turkey, and the Russian invasion of Crimea. However, this asset class as a whole has performed well since mid-March. And given that emerging markets remain very attractively priced and very under-owned among investors, it is possible there is more upside to come in my opinion.

Finally, Europe continues to perform well, and with the European Central Bank taking the monetary stimulus torch from the Fed, I believe we could possibly see a melt-up in European stocks in the second half of the year.

I am very pleased with Sizemore Capital’s performance year to date through June 26.  Dividend Growth is the best-performing portfolio among the ones I manage with year-to-date total returns of 13.5%.  

Global Macro follows with year-to-date total returns of 10.2%. Tactical ETF has enjoyed year-to-date total returns of 8.3%, and finally the Strategic Growth Alllocation has seen year-to-date total returns of 6.1%. The S&P 500 Index (SPX) has enjoyed total returns over the same period of 7.0%.

As always, my portfolio moves will depend on market conditions going forward. Yet, in my opinion and based on current valuations and macro conditions, I continue to expect outperformance from a portfolio overweighted to dividend-growth stocks and European and emerging market stocks.

DISCLAIMER: The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.