2nd Quarter Market Update from Brandywine Oak Private Wealth

Dear Clients & Friends,

We hope this message finds you and your family safe and healthy.  We are optimistic that this will be the most read quarterly commentary as everyone is stuck at home with cabin fever trying to keep themselves busy!

Amidst this period of market and economic uncertainty we are incredibly appreciative of the continued introductions from existing clients to friends, family members, and colleagues who are looking for proactive tax advice, family gifting and charitable donation strategies which they are not receiving from their current advisors.  We have received a record number of inquiries from clients this quarter on how their extended family (especially their children) can work with us to take advantage of the opportunities provided by the current market environment.

Below please find our 2nd Quarter Market Commentary, 1st Quarter Asset Class Performance, an update from Blackstone Chief Investment Strategist, Joe Zidle, on signposts for a recovery as well as Principles for Successful Long-Term Investing from JP Morgan.

Brandywine Oak Firm Updates

• Exciting News from Brandywine Oak –
  • Brittany Kalsky successfully completed the requirements needed to obtain her Certified Financial Planner™ designation (CFP®) – the CFP® is the standard of excellence in our industry that demonstrates a mastery of all components of a family’s wealth plan including estate, tax, retirement cash flow, and insurance planning.  We at Brandywine Oak are tremendously proud of the hard work and countless hours that Brittany devoted to pass this enormously intense comprehensive exam and on her first time sitting for it, no less!
  • Erin Yake has been promoted from Senior Private Wealth Associate to Chief Administrative Officer (CAO) where she will continue in her current role which includes supporting our advisors as they help with ongoing planning strategies as well as take on additional responsibilities around managing 3rd party vendors, managing internal technology initiatives, and managing future expansion plans
  • Michael Henley successfully completed the Retirement Management Advisor® (RMA®) designation which focuses on advanced retirement income planning
  • David Clark successfully completed the Chartered Retirement Planning CounselorSM (CRPC®) which focuses on general retirement planning

• Exciting National Recognition – Brandywine Oak is proud to announce that our CEO and Founder Michael Henley was recently recognized on a national level by being named to both Barron’s Top 1,200 Advisors and Forbes Best-In-State Wealth Advisors.  It is an honor to be included amongst such an extremely select group of advisors and to receive the following accolades:
  • Forbes Best-In-State Wealth Advisors: https://www.forbes.com/profile/michael-henley/
  • Barron’s Top 1,200 Advisors: https://www.barrons.com/directory/michael-henley

• Chester County Food Bank – we are pleased to announce Brandywine Oak Private Wealth made a $25,000 donation to the Chester County Food Bank.  We recognize that many families and small businesses in the community are faced with intense financial hardship during the COVID-19 crisis.  While our firm is certainly not immune to the current economic and market environment, we feel that donations such as this are more valuable now than ever as our community is facing many challenges during this difficult time.  If you are inclined to follow our lead, please find contact and donation information at https://chestercountyfoodbank.org/

• Tax-Free Bond Manager Transition – as promised, being an independent firm gives us additional objectivity as well as the flexibility to replace managers when appropriate.  To that end, for clients who currently own an individual tax-free municipal bond portfolio we have shifted from Nuveen to BlackRock for continued enhanced municipal credit oversight/due diligence.  Not only does BlackRock have slightly better historical performance on a risk-adjusted basis, but we were able to negotiate a slightly better manager fee from 12 basis points (0.12%) to 10 basis points (0.10%).  This 15% fee reduction goes right to your bottom line and immediately improves the yield of these portfolios.  This change will take effect throughout the month of April.

2Q20 Tactical ETF Portfolio Changes / Investment Updates

·         Reduced Cyclical Sectors Financials, Industrials & Consumer Discretionary and Increased Defensive Sectors Consumer Staples, Healthcare, Utilities & Communication Services Exposure – in response to the ongoing Covid-19 pandemic and the anticipated economic impact to specific sectors in the market in the coming months, we have once again increased our positions to key defensive-oriented sectors within our ETF model portfolios.  These less economically sensitive sectors (Consumer Staples, Healthcare, and Utilities) have historically outperformed the broader market throughout economic recessions.

·         Upgraded Credit Quality Across the Bond Component of Retirement and Non-Retirement Accounts – in our efforts to continue our more defensive positioning within all asset classes in our balanced ETF model portfolios, we have increased our weighting to higher quality bond holdings by adding to US Treasury bonds and decreasing the corporate & emerging market bond exposure as well as reducing municipal high yield debt.

·         Tax-Loss Swaps in Non-Retirement (taxable) CMA Accounts – we continue our tax-aware approach within our non-retirement accounts.  Through this period of heightened market volatility, we have been implementing a strategy to swap out specific positions within our models to “book” tax losses and replacing the loss position with a similar position to maintain the model’s target investment objectives.  These sales are designed to realize capital losses which can be used to offset current or future year realized capital gains as well as offset up to $3,000 in ordinary income each year.

While social distancing makes it difficult to spend time with others, we hope you are still able to enjoy the holidays and special occasions that mean the most to you and your family.

With warm regards,

Brandywine Oak Private Wealth