Wrapping Up our Review of May 2025 Model Changes
Today’s feature will continue with our coverage of several popular pre-made models after their quarterly evaluation earlier this week. For those that missed yesterday’s pulse covering trades for the CoreSolution US Core & All-Cap World ETF models, click here.
2025 has brought plenty to talk about. From struggles domestically to international strength, themes in 2025 have marked a stout shift from the ones markets brought to us over the last few years. When building out a weight of the evidence case in our analysis, the analyst team will frequently look for consistency across the platform. This can come in many forms, from absolute/relative improvement, gains on broader asset allocation tools like DALI or the Asset Class Group Scores page or shifts in our vast set of pre-made models. Today’s feature will continue our discussion on the latter.
Building on yesterday’s pulse which discussed a handful of popular ETF tactical models, our conversation today will focus on notable shifts for the FSM T Rowe Price 5S PR4050 (FSMWFTROWEPRICE5SPR4050) & American Funds 5S PR4050 (FSMAMERFUNDS5SPR4050) models. Each model uses the FSM Methodology to tactically rotate between a respective suite of T Rowe & American Funds mutual funds, respectively. This quarter’s evaluation brought several major shifts in the model’s broader allocation, seeing both drop broad domestic equity exposure as we move further into what has been a poor 2025 for the asset class. The American Funds Model shed exposure to two domestic equity holdings in favor of an international representative (IGAAX) & one fixed income option (AHITX). The shifts do highlight the growing number of areas challenging the core for relative strength. Within the American Funds model specifically, May’s changes now see the model earn its lowest domestic allocation since May of 2024. For the year, the model is off roughly 1.5%, beating its benchmark by nearly 2% so far in 2025.
FSMWFTROWEPRICE5SPR4050 saw three trades take place during our May evaluation. In a similar fashion to other models on the platform, the trades saw the model step away from the domestic space. In its place the model picked up three international options underneath the hood… its highest respective allocation since 2021. The table below breaks down total international exposure for FSMWFTROWEPRICE5SPR4050 by year. It is worth nothing that the table below organizes the data by year, but the underlying model evaluates on a quarterly basis. This doesn’t have a material impact on the data, but is at least worth mentioning to prevent confusion. FSMWFTROWEPRICE5SPR4050 maintains attractive return metrics across all of NDW’s observed timeframes. Straying from the core can sometimes be difficult to stomach and a move that clients aren’t used to, especially after the last few years. Today’s piece goes to show that shifting allocation away from the core of the market isn’t always a bad thing. In fact, complete domestic equity allocation for FSMWFTROWEPRICE5SPR4050 is historically rare. Going back to the chart below, the model has held five (of five possible holdings) domestic equity representatives only 25% of the time since 1996. Said otherwise, 75% of the time the model has exposure to some other broad asset class.
To wrap up today’s piece, we will journey back to this idea of “consistency.” International equities have certainly improved on an absolute basis in 2025, leading to relative improvements as well. Building on both of those ideas is inclusion of the asset group within NDW’s sleeve of premade models, like we have seen in today’s feature and yesterday’s pulse. All that said, keeping track of shifts in broader strength is paramount as markets digest action. The screenshot below details how to set alerts on models so you can be alerted going forwards as model changes arise.
