Northlake’s Style model shifted from Value to Neutral.  For clients with allocations to the model, we are selling one half of the holding in the Russell 1000 Value (IWD) and reinvesting the proceeds into the Russell 1000 Growth (IWF).  There is no change to the recommendation of Mid Cap from the Market Cap model.  Client positions in the S&P 400 Mid Cap (MDY) following the model will be held at least one more month.  For clients using our thematic approach but not invested directly in the models, we may shift a portion of current value investments to growth.

The shift in the Style model reflects two factors.  First, even though the economy is growing at well-above pre-pandemic rates and is likely to sustain that well into 2022, the economic data has decelerated.  Second, value stocks have performed relatively poorly over the past few months as the peak economy thesis has led investors back to less cyclical growth stocks.

Northlake feels good about moving to neutral as we believe the drop from peak growth to above-average growth will lead to a balanced advance in the market where growth and value stocks can perform well.

MDY. IWF, and IWD are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.