Category: Asset Allocation

Talking points – Keep and eye on the long term

Hi,

Thought I would share some observations regarding our portfolios and strategy given the current sell off.  

 

As the coronavirus spreads, investors have sharply sold stocks, anticipating a slowdown in economic growth and companies’ earnings.  The S&P 500 index has been hammered in the past week and is down -13% since its peak.  However, it is important to keep an eye on the long term.  Being invested over the past 11 years has reaped huge rewards.  Here are returns for some key indexes:

 

Continue reading “Talking points – Keep and eye on the long term”

Performance of large cap and core bond funds

Pete and I created performance charts for our US large cap funds as a group compared to iShares 500 index ETF (IVV) and for Core US Bond funds as a group against the iShares Barclays US Aggregate Bond ETF (AGG).  In our quarterly performance presentation we show performance of each vehicle and it was not clear that these funds as a group has performed well.

Here is a chart of performance of our US large cap funds against IVV going back to beginning of 2017:

US Large Cap Funds
A few observations from this chart:
1. Performance has been good especially considering only 22% of active managers beat the S&P 500 over the past 3 years.
2. Tracking error prior to the change in funds (9/28/18) was really low and was a main reason for the change
3. The funds as a group picked up 200 bips during the end of year downturn! The larger allocation to low vol has really helped.

I ran the same chart for our active bond managers against AGG – iShares Barclay US Aggregate ETF.

US Core Bond Funds

As you can see our collection of active bond managers has added value over iShares US Aggregate ETF.

Hopefully these charts help you explain the positive results to clients!

Thanks,

John

Asset Allocation changes – 2/25/19

Hi,

Here is the summary of the changes to our portfolios from this morning’s meeting:

Reduce EAFE

  • Europe’s growth is slowing especially Germany’s
  • Country specific issues – Brexix and Italy
  • Concerns on trade – autos

Extend duration on bonds

  • Federal Reserve on hold after 9 rate increases
  • Inflation in check
  • Near end of cycle

Increase allocation to Emerging Market stocks

  • China enacting some stimulus
  • China taken steps to shore up banking system and confidence
  • External debts OK

Increase allocation to US stocks

  • Improved valuations
  • US consumption source of global demand
  • Expect any slowdown to be relatively mild

Here are the slides from this morning’s discussion: 022519 allocation changes RM

Yield/Duration Profile – CW Fixed Income

Good Morning,

Below is a snapshot of the yield/duration profile of our fixed income investment vehicles as well as the overall profile of the fixed income portion of our different models.

Additionally, another “cash sweep” vehicle, FDRXX (Govt. Money Market), has a 7-day yield of 1.63% and weighted average maturity of 22 days.

As a point of reference, the Barclays Agg has a 30-day SEC yield of 3.1% and a duration of 5.89.

Peter Malone, CFA

Research Analyst

Direct: 617.226.0030

Fax: 617.523.8118

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com