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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Stonehearth maintains overweight equity exposure in diversified ETF portfolios following strong Q3 performance led by emerging markets and US stocks. Fed rate cuts and positive technical indicators support bullish positioning, while systematic risk management framework monitors 49 indicators for potential shifts."
Stonehearth Capital Management delivered strong third quarter performance across diversified ETF portfolios, with emerging markets leading at 14.87% and US stocks gaining 10.57%. The firm's systematic approach combines multiple asset classes including VWO, SPY, BND, VEA, and AOR within moderate risk frameworks. Key drivers include the Federal Reserve's September rate cut of 0.50% with more cuts expected, historically supportive for markets absent recession. The firm's flagship risk model moved from neutral to upper neutral/bullish zones, confirming overweight equity positioning. Technical indicators remain positive with 50-day moving average above 200-day, supporting the prevailing uptrend. Election year dynamics show strong performance patterns with 2024 ranking as third-best start since 1928. Risk management employs 49 indicators through their hedging protocol, monitoring recession probability which remains low at 13.8%. Portfolio positioning maintains overweight stock exposure across risk profiles while actively monitoring for any deterioration in economic conditions that could shift the favorable rate cutting environment.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Moderate conviction reflected in systematic ETF-based approach with clear risk management framework, but diversified positioning across multiple asset classes and hedged language about monitoring conditions limits conviction score.
Growth Outlook
Constructive market outlook supported by Fed rate cuts, strong election year performance, and positive technical indicators, though acknowledges recession risks that could change the environment.
Risk Appetite
Maintains overweight stock exposure across risk profiles with risk model moving to upper neutral/bullish zones, indicating moderate risk-on positioning but within systematic framework constraints.
Capital Deployment
Limited deployment activity with stable overweight equity positioning maintained throughout quarter, representing continuation of existing allocation rather than new capital deployment.
Forward Guidance
Monitoring approach with continued overweight positioning, watching recession probability model closely for changes, indicating selective deployment bias but not aggressive scaling.
Language Signal
Balanced language mixing positive performance data and supportive factors with risk awareness and monitoring requirements, slightly more constructive than cautious overall.
Perceived Risk
Moderate risk acknowledgment focused on recession probability monitoring and potential for rate cuts to turn negative, but current assessment shows low recession probability at 13.8%.
Opportunity Density
Selective opportunities identified across asset classes with positive performance across ETF categories, supported by favorable Fed policy and technical indicators, though approach remains systematic rather than opportunistic.
Time Horizon
Medium-term focus on market trends and Fed policy cycles with quarterly monitoring and adjustment framework, typical of diversified asset allocation approach rather than long-term buy-and-hold strategy.
