Why we like large cap stocks and energy mlps

Stock markets performed reasonably well in May as investors shrugged off the revised U.S. first quarter GDP growth of –1.0% and focused instead on solid corporate earnings and improving consumer confidence and employment.

Small cap and growth momentum sectors saw mostly positive returns. Emerging market equity indices led the markets with a 3.5% return, while U.S. large cap and international developed markets saw returns of 2.4% and 1.6%, respectively.

Fixed income markets continued their stable performance in 2014 with broad bond returns in May close to 1% with YTD returns of around 4%.

Entering June, markets have stabilized after the correction we saw during March and April. Thematically, we have maintained the broadly-based positioning we took in May for most of our strategies with only modest rebalancing.

Most Julex strategies are fully invested and are positioned to target levels of expected risk.

We continue to favor U.S. large cap equities while maintaining our rotation to REITs and increasing our allocations to energy master limited partnerships MLPs.

When it comes to the Julex Dynamic Income portfolio, we have maintained most positioning taken last month with a modest tilt to emerging market bonds from U.S. high yield bonds. The portfolio is also broadly diversified across the full income-generating spectrum, including energy MLPs, preferred stocks, and high dividend stocks.

As for the Dynamic Emerging Markets portfolio, we fully re-entered those markets in April with carefully selected exposures with some modest rotation this month.

Within the U.S. equity arena, we have maintained  We are tilting away from our small cap bias that we held in previous months and have rotated modestly away from styles to specific sector weightings including positions in utilities and energy.

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.

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