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WrapManager's Investment Policy Committee

Brookmont Capital Dividend Equity Strategy Commentary

Posted by WrapManager's Investment Policy Committee

August 25, 2015

Brookmont Capital's Dividend Equity Strategy provides their Second Quarter report covering perspective on foreign markets, more assumptions on interest rates and how they positioned their portfolio in response.

“The markets struggled to move higher during the second quarter due to a conflux of bad news from foreign markets and earnings disappointments from several domestic companies. The markets took their biggest hit during the month of June as fears about Greece, China’s economy, and second quarter earnings announcements led to widespread sales activity.

The Dividend Equity Strategy was repositioned during the second quarter in anticipation of increasing risk in the equity markets. Valuations were becoming stretched based on expected earnings growth and consensus assumptions that the Federal Reserve will raise short-term interest rates during the second half of the year.
During the second quarter we reduced our position in mid-cap stocks by 50% and now represent only 16% of the portfolio. This is our lowest weighting in small and mid-cap stocks since early 2009. This market sector outperforms during the early stages of an economic recovery and has historically underperformed when interest rates rise and the market cycle has peaked.

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Economic/Market Outlook

Eagle's Skeppstrom on Greece and China's Woes

August 19, 2015

Eagle Asset Management's Richard Skeppstrom provides his colorful perspective on the recent market events including Greece, China and his candid friends. “Confused situation, imperfect advice One of my closest friends reached out to me on Father’s Day to say he thinks I am a better father than stock-picker. I was touched. And then more recently, another very dear friend said he enjoyed my writing but wished I’d say something. Lovely friends. Most folks just don’t care enough to give you such thinly veiled criticisms. [+] Read More

Granite Investment Partners - Interest Rates, Market Volatility

August 13, 2015

Granite Investment Partners provides their reflections on the second quarter. Topics discussed are mixed economic data, weaker GDP growth and the question on everyone's mind, when the Fed will raise interest rates. "Reflections Market remains little changed amidst volatility The market remained largely range-bound in the quarter and for the year. The S&P 500 index ended the quarter basically flat, gaining +0.28%, bringing year-to-date total return for the first half of 2015 to +1.23%. Investors remain in somewhat of a holding pattern as they continue to monitor signals from the Federal Reserve in anticipation of the end of the prolonged period of easy domestic monetary policy. Market consensus has shifted expectations for the first rate hike forward into September, albeit with a fair amount of uncertainty due to conflicting economic data signals. [+] Read More

Clearbridge Investments - Multi Cap Growth Q2

August 4, 2015

Clearbridge's Richard Freeman and Evan Bauman, provide their perspective on the second quarter discussing views on market volatility, focus sectors, and interest rates. "Market overview and outlook U.S. stocks traded in a tight range during the second quarter, with the major indexes ending largely unchanged. The large cap S&P 500 Index gained 0.28% for the quarter, the small cap Russell 2000 Index added 0.42%, while the broad market Russell 3000 Index gained 0.14%. Volatility remained low as investors awaited a clear signal from the Federal Reserve on when it will commence raising short-term interest rates. The S&P 500 sustained its longest stretch without a 2% daily move up or down since 2007. That more than six-month stint was snapped on June 29 when the index fell 2.09% following the breakdown of talks between Greece and its creditors. The sharp drop – the largest for the S&P 500 since April 2014 – pared gains for most equity benchmarks. [+] Read More

Federated - Strategic Value Dividend Q2 Commentary

July 29, 2015

Federated has released their second quarter, managed account commentary for their Strategic Value Dividend portfolio. "Market Overview The major equity indexes slipped in June, as generally better-than-expected data on the U.S. economy gave way to worries late in the month over a possible Greek default, exit from the euro or both.The bulk of the monthly decline, which saw the S&P 500, Dow and NASDAQ fall a respective 2.1%, 2.2% and 1.6%, came on June 29, when a strong risk-off trade sent global equity markets tumbling as the Greek issue came to a head. June’s losses were enough to push the S&P to a virtually flat total return for the quarter. [+] Read More

Geneva Advisors - Market Volatility

July 23, 2015

Geneva provides its second quarter market overview for 2015. They discuss geopolitical risks effect on volatility, global economic positioning and their optimism for the future. “Market Overview U.S. equities generated modest gains in the second quarter. Improving economic data, continued easy global monetary policy and increased merger and acquisition activity combined to help sustain higher equity prices.Geopolitical risks, however, now including those in Greece and China, caused increased market volatility. [+] Read More

Top Equity Money Manager Picks - Q3 2015

July 22, 2015

To help investors discover and evaluate money manager strategies, WrapManager’s Investment Policy Committee highlights certain strategies each quarter. These encompass a wide range of asset classes and investment disciplines. Here are this quarter’s strategies: [+] Read More

Eagle Asset Management - Interest Rates and Your Retirement Plan

July 9, 2015

Eagle Asset Management's Richard Skeppstrom provides his market perspective for July. "Prudence is restraining growth? Second-quarter domestic economic growth has not bounced as much as expected. That’s curious because the weather has improved and the collapse in the price of oil put money in folks’ pockets. I’ve read in a few different places that we are saving the money that we would have spent on fuel. Saving? Like, not spending? Frankly, I’d dismissed the whole notion as absurd. Americans spend. However, that was until I saw a brief note describing Larry Fink’s theory on the matter. He’s the maestro of BlackRock and I pay attention when he speaks (he manages a few trillion dollars more than me). Mr. Fink believes very low interest rates are forcing people to save more for retirement. That’s entirely logical but hard to embrace since we (a large swath of the adult population) have ignored the economic realities of retirement for as long as I can remember. [+] Read More

Eagle Asset Management's Perspective on Rate Increases

June 25, 2015

Eagle Asset Management's Richard Skeppstrom discusses the Fed's approach to debt and credit in this month's Market Perspective. "Betwixt and between The easy money’s been made. That’s not gloomy talk. It’s not controversial. It’s not a recommendation to do anything. It’s a fact. You can expect high returns from stocks when margins are depressed, valuations are low, interest rates can be slashed and the U.S. Federal Reserve is about to juice the system. But that’s simply not where we are now. We are in a new market where the returns will be lower, fewer things will work and volatility will be higher. We will be in this environment for the foreseeable future. This is sort of like getting older. As they say, it’s better than the alternative. Cheer up. [+] Read More

Federated Investors - Strategic Value Dividend Commentary

June 24, 2015

Federated Investors discusses consumer spending and speculates on the potential "snapback" in the coming quarter. "Market Overview The month closed with the first revision to the first-quarter flash estimate of the U.S. gross domestic product (GDP), showing the economy entered contraction territory. A wider trade deficit, smaller inventory build and a downward tweak to already modest consumer spending drove the decline, putting real GDP at -0.7% annualized. The report was hardly surprising to the markets, which actually had been expecting a little worse. The bigger question is how much of a snapback to expect in the current quarter. [+] Read More