Dear Clients & Friends,
We hope you are enjoying your summer and the warm weather—
The end of this month will mark our one-year anniversary from the launch of our firm. We have successfully transitioned 98% of the assets we managed at Merrill (Lynch). Thank you all for your continued trust and confidence as well as the introductions to friends, colleagues, and family members who were not previously clients and have since joined our practice.
In addition to our quarterly emails, you can continue to stay connected with Brandywine Oak Private Wealth by following us on LinkedIn where we provide weekly updates on the firm, industry, and various planning topics such as potential tax law changes:
Brandywine Oak Firm Updates
- At Brandywine Oak we are proud to partner with Chester County Life magazine. We appreciate how important the local community is to the families we work with and are excited to enhance our presence within the Brandywine Valley. Chester County Life has demonstrated consistent excellence in recognizing the significance of local organizations and supporting small business.
- For those clients who own individual tax-free bonds managed by Nuveen for credit oversight/due diligence we have been able to negotiate the manager fee from 16 basis points (0.16%) to 12 basis points (0.12%). This price reduction is yet another benefit of being an independent firm as there is no big bank keeping a portion of the manager fee. This 25% cost reduction goes right to your bottom line and immediately improves the yield of these portfolios. This price change will take effect starting this quarter.
3Q19 Tactical ETF Portfolio Changes / Investment Updates
- Sold Energy Exposure and Added Consumer Staples – we expect oil prices to remain lower, and Energy historically being more cyclical in nature tends to underperform in the late stages of a bull market. Leverage also remains elevated across the Energy sector. Consumer Staples as a sector are some of the highest quality companies with earnings stability and potential for dividend growth. We expect corporate profits in the US to slightly decelerate in 2019 and prefer defensive positioning in sectors such as Staples, Health Care, and Utilities.
- Increased Large-Cap Exposure Across Both US and Foreign Stocks – in the late stages of an economic expansion small-cap companies tend to lag large-cap companies. We continue to maintain exposure to small-cap companies but now maintain a more neutral position rather than an overweight allocation. Small-cap companies tend to lag during Fed tightening cycles as they maintain higher levels of leverage than large-cap companies.
- Within Real Assets Replaced Commodity Exposure with Global Real Estate – we remain neutral on commodities but continue to maintain a 5% position in gold for the diversification benefits. Commodity prices tend to be uncorrelated with the economic expansion, however, we expect tangible assets such as global real estate (REITs) to benefit portfolios by protecting against the effects of inflation and generating streams of cash flow.
- 2Q19 Asset Class Performance Chart – below is the quarterly asset class performance chart showing how various asset classes did during the 2nd quarter.
With warm regards, Michael, Alison & Team
Brandywine Oak Private Wealth
Phone: 484.785.0050 | Fax: 484.785.0049
500 Old Forge Lane, Suite 501 | Kennett Square, PA 19348