Monthly Summary

China is marginally underweighted. Valuations are not particularly cheap. On the positive side, Its terms-of-trade trend (commodity export prices relative to import prices) is positive. Taiwan is underweighted with more downward earnings estimate revisions than upward. Korea says underweighted with its trailing price-to-earnings higher than its 10-year average. India is also underweighted with valuations which are expensive on an absolute basis and relative to its own history. 
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Turkey continues to be overweight based on cheap valuations, a sharp decline in Sovereign Spreads following the elections and a very undervalued real exchange rate. As stated over the last several months, despite our disciplined framework, we urge caution. Poland is also overweighted with cheap valuations and strong 12-month momentum. South Africa is underweighted. It continues to have a negative terms-of-trade trend and large downgrades to forecasted 2023 GDP. 
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We have increased Brazil to an overweight as it has come out of our “value trap” category. It continues to have inexpensive valuations along with strong 12-month momentum. Chile and Colombia are both out of our “value trap” category this month as well but are not overweighted with weak 12-month price momentum. Mexico is underweighted as its exchange rate remains overvalued. 

Purpose

The Global Investment Outlook summarizes the country allocation recommendations of our interactive model for developed markets. The goal is to enhance the dollar returns of un-hedged, long-only emerging market equity portfolios.

Coverage

Unless otherwise noted, all return data are from the MSCI indices. Our passive benchmark is composed of the same 23 markets under coverage, and approximates the performance of the MSCI Emerging Market Index.

Disclosures

This material has been prepared and issued by DCM Advisors, LLC for distribution to market professionals and institutional investor clients only. This document has been prepared for informational purposes only and is not a solicitation of any offer to buy or sell any security, commodity, futures contract or instrument or related derivative (hereinafter "instrument") or to participate in any trading strategy. Any such offer would be made only after a prospective participant had completed its own independent investigation of the instrument or trading strategy and received all information it required to make its own investment decision, including, where applicable, a review of any prospectus, prospectus supplement, offering circular or memorandum describing such instrument or trading strategy. This material does not provide individually tailored investment advice or offer tax, regulatory, accounting or legal advice. The securities discussed in this material may not be suitable or appropriate for all investors. Prior to entering into any proposed transaction, recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic risks and merits, as well as the legal, regulatory and accounting characteristics and consequences of the transaction. You should consider this material among other factors in making an investment decision. This information is not intended to be provided and may not be used by any person or entity in any jurisdiction where the provision or use thereof would be contrary to applicable laws, rules or regulations. Any securities referred to in this material may not have been registered under the U.S. Securities Act of 1933, as amended, and, if not, may not be offered or sold absent an exemption therefrom.

All investments are subject to the risk of loss, including the potential for significant loss, and it should not be assumed that any models or opinions incorporated herein will be profitable or will equal past performance.  Further, the models do not represent actual trading, and interim volatility may be materially different within the time frame reflected in the charts.

The performance figures represent outputs from a global allocation model, not an actual portfolio.  The “performance” reflects the hypothetical performance of the model.  The performance calculations do not represent the results of actual trading but were achieved by means of the retroactive application of the model designed with the benefit of hindsight.   The model’s factor weightings are revised from time to time.  The hypothetical results are then rerun to reflect the revised weightings.  Therefore, the hypothetical calculations reflect the results that would have been realized if the model were to have been run according to current weightings. Hypothetical performance results have inherent limitations.  There often are large differences between hypothetical performance and actual performance results.  The actual performance results that could have been achieved by any investor in reliance on the model could be significantly different than the hypothetical performance shown, especially as the model does not indicate which securities to purchase or sell, nor does it include management and trading fees.   The performance of the model assumes the recommended country weightings times the MSCI index return for each country (gross dividends).  Past hypothetical performance should be not being taken as an indication or guarantee of future performance and no representation or warranty, expressed or implied, is made regarding future performance. Returns are presented gross of investment advisory fees, broker and other commissions, and any other expenses that a client would have paid or actually paid. Returns will be reduced by such fees and expenses.  For example, a 0.50% annual fee deducted quarterly (0.125%) from an account with a ten-year annualized growth rate of 5% will produce a net result of 4.4%. Actual performance results will vary from this example. Further, Exchange-Traded Funds that track theses MSCI indexes would be charged expense ratios that would reduce returns.
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These strategies are for illustrative purposes and do not relate to strategies offered by DCM Advisors, LLC. The performance results for DCM Advisors' clients were materially different from the hypothetical results portrayed in the model. Returns should not be considered indicative of the skill of the adviser.

Source: MSCI.  The MSCI sourced information is the exclusive property of MSCI Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI Intellectual property may not be reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an “as is” basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI and the MSCI Indexes are services marks of MSCI and its affiliates. Morgan Stanley Capital International (MSCI) indexes are unmanaged market capitalization-weighted indexes. The indexes do not reflect transaction costs or management fees and other expenses. MSCI index returns are calculated with dividends reinvested. The volatility of the model portfolio may be greater or less than the benchmarks. It is not possible to invest directly in these indices.

MSCI Emerging Market Index: The MSCI Emerging Markets Index is a free float adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

For a full description of the MSCI Indexes, please click on the following link: https://www.msci.com/emerging-markets