Summary of Clearwater’s Portfolio Strategy Adjustments

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Q1 2021

  • Tactically overweighted equity exposure in anticipation of effective COVID vaccinations, a surge in corporate earnings and the reopening of the U.S. economy

  • Transitioned to an unconstrained fixed income posture in anticipation of rising inflation pressure and rising interest rates (added real estate, utility stocks, EM debt, and international high yield equity)

Q2 2021

  • Swapped mortgage-backed bonds for short-term treasury inflation protected securities (TIPS) to reduce duration (interest rate sensitivity) and increase inflation protection

  • Enhanced unconstrained fixed income exposure by adding broad commodity exposure, US high yield equity, and increasing to our existing real estate position

Q3 2021

  • Rebalanced equity exposure (took profits) to top-off ultra-short duration fixed income positions

  • Reestablished cash equivalent allocation (dry powder) for future opportunities

Q4 2021

  • Tactically reestablished equity overweight in response to market volatility

  • Enhanced broad commodity exposure in response to building supply chain pressures

  • Completed a round of tax loss harvesting positions to reduce capital gains realized earlier in the year

Q1 2022

  • Swapped short duration high yield bond and utility exposure for short duration high quality bonds to reduce strategy risk profiles (high yield spreads were tight / utility valuations were stretched)

  • Exited emerging market debt exposures given war in Ukraine (eliminated foreign sovereign debt and the local currency risks)

  • Enhanced ultra-short duration fixed income to reduce strategy risk profiles (safety)

  • Reduced commodity exposure given large gains (profit taking) to enhance U.S. high yield equity

  • Opportunistically added to beaten down technology and thematic equity strategies

*The details above are representative of the asset allocation decisions as made by the Investment Policy Committee of Clearwater Capital Partners. All accounts are managed individually and, as such, actual strategy in use may vary based on a variety of conditions such as legacy holdings, size of the account, investment objective, tax sensitivity, timing of cashflows and client requested customizations. Please consult your advisor and/or your statements for specifics on your strategy.