YieldQuest Advisors LLC, a fixed-income and equity portfolio management boutique catering to small and mid-sized institutions and financial advisors, recommends that investors take a maximum underweight approach to emerging market equities, especially Chinese equities.
YieldQuest moved to an overweight / maximum overweight exposure to emerging market equities following the sharp August correction, which has since outperformed the S&P 500 by 15.5 percent. They now recommend taking a cautious approach due to the currently rich valuations of emerging market indexes.
Chinese equities are of particular concern to YieldQuest considering they have risen to the top-end of their one-year historical trading range, an event that, according to Jay K. Chitnis, CFA, senior managing director and chief investment officer of YieldQuest Advisors, may indicate a significant short-term pullback.
"Given the out performance of the emerging market index, we feel that the juice may have been squeezed out of this lemon," said Chitnis, "If and when our short-term cautious bias proves correct and emerging markets equities see a meaningful correction, we would recommend to then increase exposure to this asset class; however, we do think there is a potential 10-30 percent correction coming in the short term."
About YieldQuest Advisors
YieldQuest Advisors LLC is an Atlanta-based investment management firm that utilizes the diverse expertise of its executive staff and chief investment officer, Jay K. Chitnis, CFA, to implement its proprietary investment strategies for an exclusive registered investment advisor (RIA) and institutional client base. Founded in 1998 as a broker-dealer group specializing in fixed income trading for fee-only registered investment advisors, YieldQuest has since transitioned into a holistic, fixed-income and equity portfolio management organization offering broker-dealer services, separate account management, and a suite of mutual funds. Additional information on YieldQuest companies is available online at www.yieldquest.com.
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