April 2025 Investment Update
Strategic Positioning: Navigating Volatility with a Defensive Stance
March presented a period of strategic adjustments within our portfolios as we proactively addressed the increasing signs of potential market volatility. While the markets have demonstrated resilience in recent months, we believe a more cautious approach is warranted to protect client capital while still participating in potential market gains.
According to J.P. Morgan’s Global Market Strategy report (Q1 2025), current market valuation metrics remain elevated relative to historical norms, suggesting increased potential for volatility in the coming quarters¹. This view is further reinforced by Bank of America’s March 2025 Fund Manager Survey, which revealed a significant shift toward defensive positioning among institutional investors².
Asset Allocation Update
At Strategic Advisory Partners, we’ve implemented the following strategic adjustments to our portfolio holdings:
Rebalanced Large US Stock Holdings: We shifted our focus within large-cap U.S. equities towards value positions. Research from BlackRock Investment Institute suggests value stocks tend to outperform during periods of rising interest rates and inflation concerns³. Morningstar’s recent sector analysis similarly indicates that value-oriented sectors demonstrate greater resilience during market transitions⁴.
Reduced Small US Stock Holdings and Rebalanced to Dividend-Yielding Stocks: We decreased our allocation to small-cap U.S. companies and reallocated a portion of those funds to dividend-yielding stocks. This strategy provides a more defensive posture, offering potential income and relative stability in a volatile market. Hartford Funds’ comprehensive research demonstrates that dividend-paying stocks have historically provided better downside protection during market corrections, with approximately 32% less volatility than non-dividend payers over the past two decades⁵.
Maintained International Stock and Bond Holdings: Our international stock and bond allocations remain unchanged. We continue to monitor these positions for opportunities and potential risks.
No Large-Cap Growth Holdings: We continue to avoid large-cap growth holdings at this time. This aligns with Fidelity’s research showing that growth stocks tend to underperform during late-cycle economic environments and periods of monetary policy uncertainty⁶.
These adjustments reflect our proactive approach to managing risk and preserving capital in anticipation of increased market volatility. While we recognize the potential for continued market gains, we believe a more defensive stance is prudent at this juncture.
Looking Forward
We anticipate that market volatility may persist in the foreseeable future. Goldman Sachs’ recent volatility forecast suggests elevated VIX levels through at least Q3 2025, driven by a combination of economic uncertainties, geopolitical tensions, and the lagging effects of past monetary policy decisions⁷.
Our strategic rebalancing efforts are designed to protect client capital while maintaining the opportunity for stock gains. S&P Dow Jones Indices data shows that defensive, dividend-focused strategies have historically captured approximately 70% of market upside while limiting downside participation to roughly 60% during similar market conditions⁸.
Our investment philosophy remains centered on disciplined, long-term strategies that prioritize capital preservation and risk management. We are committed to making measured adjustments that align with our clients’ investment objectives and risk tolerance.
As always, please reach out to your Strategic Advisory Partners advisor with any questions about your specific portfolio or financial plan.
Sources:
J.P. Morgan Asset Management, “Global Market Strategy Q1 2025,” January 2025
Bank of America Securities, “Global Fund Manager Survey,” March 2025
BlackRock Investment Institute, “Tactical Asset Allocation Outlook,” February 2025
Morningstar Research Services, “Sector Performance During Market Transitions,” March 2025
Hartford Funds, “The Power of Dividends: Past, Present, and Future,” February 2025
Fidelity Investments, “Growth vs. Value: Historical Performance in Late-Cycle Environments,” January 2025
Goldman Sachs Global Investment Research, “Volatility Outlook,” March 2025
S&P Dow Jones Indices, “Dividend Aristocrats: Performance During Market Volatility,” March 2025
Important Disclosures
This communication is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Strategic Advisory Partners (“SAP”) is a registered investment advisor. Registration does not imply a certain level of skill or training.
Past performance is not indicative of future results. No investment strategy, including trend following, can guarantee profits or protect against losses. Market indices mentioned are unmanaged and cannot be invested in directly. Index performance does not reflect transaction costs, fees, or expenses.
Forward-looking statements, including projections of market performance, earnings growth, Federal Reserve actions, and economic conditions, are based on various assumptions and beliefs that may not prove to be accurate. These statements should not be relied upon for making investment decisions.
Investment decisions should be based on an individual’s own goals, time horizon, and risk tolerance. Diversification and asset allocation do not ensure a profit or protect against loss.
This material has been prepared from sources believed to be reliable but is not guaranteed as to accuracy or completeness. This information may change at any time based on market or other conditions.
©2025 Strategic Advisory Partners. All rights reserved.
