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
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