Leuthold Group raised its equity exposure to 38% from 30% after markets closed on Friday, according to a memo to clients from the investment research and strategy firm. It is the first phase of a move that could see net equity exposure increase to 50%, even if its major trend index remains bearish, Andy Engel, senior research analyst, wrote in the memo. If the stock market weakens significantly (this) week, more of the equity hedge will be reduced.
The firm raised the equity exposure in its core and asset allocation portfolios, reducing its equity hedges.
There is not as much downside risk, so it makes sense to move the core and asset allocation portfolios off their maximum defensive positions of 30%, Mr. Engel said in the memo.