Tactical Asset Allocation – September 2017

Sendero Wealth Management Wealth

Every quarter we publish the current opinions of the Sendero Investment Committee on various asset classes used or considered for client portfolios versus their strategic allocation. These comments reflect opinions as of the specific date listed and can change rapidly based on market conditions. Sendero prepares this analysis as one of the tools used to grow wealth responsibly through a well-designed investment strategy with a tilt towards opportunistic asset allocation: Tactical Asset Allocation – September 2017

WOAI – Prominent S.A. Financial Leader Bullish on Fed Moves

Sendero Wealth Management News

The Federal Reserve Board on Wednesday said it will formally begin to sell some $4.5 trillion in bonds which it purchased as part of the ‘Quantitative Easing’ effort to end the Great Recession, and recalibrated its plan for interest rate increases over the coming two years, moves applauded by prominent local financial analyst Liz Crawford, News Radio 1200 WOAI reports.

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SABJ – New Leaders to Steer San Antonio Wealth Management Firm

Sendero Wealth Management News

From the San Antonio Business Journal: 

After more than 20 years in business, the co-founders of Sendero Wealth Management are moving into advisory roles and handing off operations to new leaders.

Fred Middleton is now chairman emeritus, and longtime CEO Scott McMillian is chairman, according to the firm.

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Tactical Asset Allocation – June 2017

Sendero Wealth Management Wealth

Every quarter we publish the current opinions of the Sendero Investment Committee on various asset classes used or considered for client portfolios versus their strategic allocation. These comments reflect opinions as of the specific date listed and can change rapidly based on market conditions. Sendero prepares this analysis as one of the tools used to grow wealth responsibly through a well-designed investment strategy with a tilt towards opportunistic asset allocation: Tactical Asset Allocation – June 2017

Competition with index funds is ferocious, but clients want more than just performance.

Sendero Wealth Management Wealth

Last October, London-based Henderson Group announced its merger with Denver-based money manager Janus Capital Group. This past March, two big British firms, Standard Life and Aberdeen Asset Management, agreed to join forces.

Several formidable trends are leading this activity in the asset management business. First, the growth of indexing, or passive, and quantitative strategies have been the recipient of massive and consistent inflows. Second, returns for active managers have been disappointing as few managers have been able to beat their benchmark net of fees and taxes. Third, technological disruptions such as robo-advisors, have impacted firms’ access to distribution channels for their products and services. Fourth, record-low interest rates and controversial monetary policies have sparked a roaring stock market where investors just want exposure.

While this conversation is not focused on the merits of active versus passive investing, the trends mentioned above have long-lasting implications for the financial industry and ultimately for investors.

Competition with index funds is ferocious, but clients want more than just performance. Fees are under scrutiny and few understand the value delivered by their advisors. Clients demand more transparency, easier access to their information, and a greater depth to not just what they are invested in, but how and why! Benchmarks are not goals.

We would argue advice has been commoditized, for now, until it matters again.

Recognizable and legacy money managers may disappear, new names will emerge. The technology will surely continue to change and investors may even realize that active managers can offer some value when the next recession comes around.

All this means we must continue to improve and adapt our processes, our thinking, and our attitude about finding the next “great” investor. This requires a healthy balance of honest conversations and qualitative data. A lot of money may go to one manager, but that does not necessarily mean a better manager. Or more specifically, a better investment.

These recent two mergers are relevant for us wealth managers, as we believe in the value of finding good and smart managers that have a differentiated edge to investing and have a history of providing our investors above average risk-adjusted returns. Due diligence of such firms now requires another layer of deep investment and operational research given the industry will most likely evolve and look different over the next twenty years.

Reacting to headlines and short-term trends are great for cocktail parties, but bad for long-term success.

What is not going to change is the value of trust and your relationship with your advisor.

Staying or Leaving: A Look at How the “Grexit” May Affect You

Sendero Wealth Management News

Just three months in, Greece’s newly elected government is standing firm on the anti-austerity platform that brought it to power in the first place. Its creditors are not wanting to give in to the persistent Greek demands and offer another new bailout deal. If progress is not made soon, Greece will have to make a decision on whether or not they will stay or leave the European Union. Let’s take a look at both scenarios.

What it would mean if Greece leaves the European Union

If Greece were to abandon the EU, the new government would have to immediately circulate a new currency. This new currency would quickly depreciate against the Euro, put Greek banks in danger of closing and cause interest rates to shoot up. Some are saying that a Grexit may be best for both Greece and Europe in the long term. Greece would have the opportunity to allocate more funds to areas that they feel are important for progress. Jobs could be created to address the 20% unemployment rate in the country, and banks would be better able to loan money to consumers. If Greece hopes to once again be a contributing and thriving economy, the best course of action might well be to leave the EU –but it won’t come quickly, and it won’t be painless.

So, how will this affect the markets? In the short-term, we could see an increase in volatility, but European banks have been reducing exposure to Greece, and investor confidence in the Eurozone is much higher than it has been in recent years. Long-term, structural risk could be a concern due to the potential precedent such a move would set for other European countries like Spain, Portugal and Italy – all of which are carrying large amounts of debt. The fallout of an exit remains largely unknown, though as no country has ever left the EU.

What it would take to keep Greece in the European Union

Greece and its creditors will have to find a common ground if they hope to stay in the EU. Since the beginning, the two sides have taken a tough stance in negotiations but recent progress has led to optimism (albeit cautious) that a deal will get done. To access rescue funds, Greece will need to win over its counterparts of the Brussels Group which consists of the International Monetary Fund, the European Commission and the European Central Bank. If Prime Minister Alexis Tsipras is able to strike a deal with the creditors’ group, it will pave the way for euro-area finance ministers to consider making a payment.

What’s next?

With the European Central Bank recently approving a €1.2 billion increase in emergency funds to Greek lenders, negotiators seem to be making a little bit of progress. Hopefully this is the case, as Greece has said that it fails to secure more funding from its creditors it may be forced to seek funding from other countries.  Tsipras, recently met with Vladimir Putin to discuss a possible exchange of cash for Greek assets. With the EU and Russia already at odds over Ukraine, many see the meeting as no more than politicking. But if a Greek/Russian partnership were to happen, it would be interesting to see how the Russians leverage the agreement, as Russia is in a recession of its own.

Unlike 2010, the EU is in a much stronger position now to handle a Greek departure. German Chancellor Angela Merkel remains optimistic that an agreement will be reached and that a Grexit will be avoided.