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Wealth Management
Changing dynamics: Money managers shift toward value and overseas stocks
Adrienne Frank
Vice President Wealth Management /
Senior Portfolio Manager Frank & Levy Wealth
Management Group-UBS Financial Services
Fort Lauderdale
Adrienne Frank’s strategy this year includes overweighting energy and value stocks. More specifically, she is trimming investment in growth stocks and adding value stocks, taking a measured approach. “Going forward, I think we’re going to see value outperform the growth.” If someone wants to invest new money into the equities market, Frank would advise dollar-cost-averaging over six months after identifying sectors that have underperformed.
Frank also likes emerging markets, commodities, developed international and emerging markets and mutual funds that replicate hedge fund strategies.
Frank says the bonds in her portfolios last year earned the standard return, and it was tax-free. For 2018, her strategy includes investing in municipal bonds. She argues that bonds are not an all-ornothing asset class. “If things change in the stock market, fixed income is insurance.”
Eric Sommer
Wealth Director /
Senior Vice President
PNC Wealth Management / Orlando
Eric Sommer urges most clients to pay off debt rather than look for big gains in the market. With that completed, he recommends putting money into college savings plans and 401(k)s, adding money to IRAs and creating an annual vacation fund.
Sommer agrees for the most part with some economists that the economic expansion may continue into 2019 based on consumer spending and business growth. Depending on the client, Sommer may recommend investing for the long term in large, strong companies, taking into consideration diversification of a portfolio. “Most big institutions stay away from IPOs and hot stocks. I look at it as slow and steady,” he says. Sommer noted that S&P stocks have performed well and should continue to do so long term. He also likes large banks and will add more of those stocks to his clients’ portfolios this year.
“For the next couple of years, the U.S. economy has a lot more going for it than not,” he says. “However, expect more market volatility.”
In terms of fixed income, Sommer is choosing bonds based on investors’ objectives, tax situations and the time frame they need to get their money out. Municipal bonds and corporate bonds could be options, he says. Also, adding elements to a bond portfolio that are less interest-rate sensitive is an option since experts assume interest rates will go up three times this year.
David Hill
Managing Director /
Investments Integrated Wealth Solutions /
Raymond James /
Orlando
David Hill wants his clients to make paying off debt a top priority this year — particularly student loans, car loans and creditcard balances. Hill believes in paying off high-interest loans instead of putting money in the stock market, which has no guarantee of any return at all.
For 2018, Hill is taking a cautious approach. With some clients, he has begun shifting gains from equities into cash and/or short-term fixed-income with an eye to dollar-cost-averaging back into the market if equities decline significantly. If clients want to use gains to pay off debt, he is in favor of it, he says.
Hill cautions against lifestyle creep, or increasing your standard of living, just because markets have risen in recent years. In deciding whether to sell equities, Hill advises against factoring in the tax penalties. “Don’t let taxes fog a decision related to taking gains,” he says. Hill suggests a heavy investment in equities but advocates taking gains regularly and moving them into under-performing asset classes in your portfolio. “Eventually, you will have to pay taxes, but under the current tax law, it is not as bad. You are better off paying 20% on a gain than having a gain dissipate if the market goes against you.”
Hill says investors should approach the remainder of the year with an eye toward risk management and re-evaluate their overall financial plan based on the time frame in which they need their money to grow. “In this market environment, it really is important to take a diversified approach,” he says.
V. Raymond Ferrara
Chairman / CEO
ProVise Management Group
Clearwater
Ray Ferrara sums up his strategy for investment: Don’t invest in cryptocurrency, avoid investing in long-term bonds and steer clear of investing in the dollar against other currencies. “It looks as if the dollar will continue to weaken,” he says.
Instead, the certified financial planner favors health care and banking stocks because of the positive outlook for those industries. He believes bank stocks will perform well this year with the rising interest rate environment. He likes health care because of the significant mergers and acquisitions activity in the sector and the large aging Baby Boomer population. Overall, Ferrara sees the equity market as a good investment and expects a continued rise: “Just how dramatically, though, we will have to wait and see.” With new money, he would dollar-cost-average into the market over the next six to 12 months. “If it goes down, you can buy more as it is going down.”
Recognizing technology as a hot sector of the equities market, Ferrara says investors should use a longer-term approach. “If you are buying or holding technology stocks for 2018, you may experience a lot of volatility. If you are holding them for five years or more, it is highly likely you will be rewarded nicely for your investment.” Ferrara says he is selling his winners and buying more of the losers. “I am selling stocks that went up in value and buying those that didn’t go up as fast or declined. It sounds counterintuitive, but everything runs through cycles.”
Ferrara says he doesn’t shy away from investing in bonds but is buying on “the short end of the curve” with a maturity of less than three years. “You may give up interest, but you protect the principal.”
