DWTFX Leading the Pack YTD

May 1, 2013

According to Morningstar, The Arrow DWA Tactical Fund (DWTFX) is now outperforming 95% of its peers in the World Allocation category YTD.  Through April, the fund is up 9.79%

DWTFX

 

You can access the fact sheet for the fund by clicking below:

fact sheet

 

See www.arrowfunds.com for more information.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.

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Financial Repression Primer

May 1, 2013

Research Affliliates published a very nice primer on financial repression on Advisor Perspectives.  It’s well worth reading to get the lay of the land.  Here’s how they define financial repression:

Financial repression refers to a set of governmental policies that keep real interest rates low or negative and regulate or manipulate a captive audience into investing in government debt. This results in cheap funding and will be a prime tool used by governments in highly indebted developed market economies to improve their balance sheets over the coming decades.

When you hear talk about “the new normal,” this is one of the features.  Most of us have not had to deal with financial repression during our investment careers.  In fact, for advisors in the 1970s and early 1980s, the problem was that interest rates were too high, not too low!

There are disparate views on the endgame from financial repression.  Some are expecting Japanese-style deflation, while others are looking for Weimar Republic inflation.  Maybe we will just muddle through.  In truth, there are many possible outcomes depending on the myriad of policy decisions that will be made in coming years.

In our view, guessing at the outcome of the political and economic process is hazardous.  We think it makes much more sense to be alert to the possibilities embedded in tactical asset allocation.  That allows you to pursue returns wherever they can be found at the time, without having to have a strong opinion on the eventual outcome.  Relative strength can often be a very useful guide in that process.

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High RS Diffusion Index

May 1, 2013

The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.)  As of 4/30/13.

diffusion 05.01.13

The 10-day moving average of this indicator is 65% and the one-day reading is 76%.

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