Investment managers are all over the map when it comes to remixing portfolios to cope with the many changes taking place right now in the U.S. and the world.
Many, but not all, are altering the allocations for their clients’ portfolios to try to take advantage of rising interest rates, the strengthening dollar, the upsurge in value over growth investments and political upheavals in the U.S. and Europe.
“Wait to see what shakes out” is the best policy, says Kevin Roskam, vice president of Portformulas, an RIA in Ada, Mich., with $450 million in AUM that is part of the USA Financial family. “We do not change anything because of immediate events; we focus on managing money unemotionally. We meet monthly to talk about asset allocation and have a repeatable process.”
“Brexit is a good example. We did not make any move right after the vote; we waited to see what would happen. The same is true this year for tax reform and deregulation under the new administration. We will wait to see what actually happens,” he explains. “Our disciplined, repeatable process let us avoid the 2008 crisis, so it does well.”
Ryan Caldwell, chief investment officer for Chiron Investment Management in New York City, which has $340 million in AUM, says, to a certain extent, his firm also is waiting to see what tax reforms are put in place and how the economy reacts to policy changes.
“We are pretty optimistic the economy will grow both domestically and internationally, but we are less optimistic that the dollar will continue to strengthen,” he says. “We are starting to make some changes such as overweighting on the health care sector, where we were underweighted.”
Other money managers are making different changes. Dan Neiman, portfolio manager of Neiman Funds Management LLC in Williamsville, N.Y., with $250 million in AUM, says the improvement in the economy has prompted his firm to lower the amount of money clients hold in cash. If the economy continues to improve, they will move even more money out of cash and put it back in the market.
Neiman is also moving out of emerging markets to large-cap investments both domestically and globally.
Ron Weiner, managing director and partner at RDM Financial Group at Hightower in West Port, Conn., with $750 million in AUM, says RDM is optimistic about ETFs and the number of new investments available there. “We’re going to add back some foreign holdings with ETFs because domestic stocks are becoming pricey. It is worth an allocation to Europe now [despite elections coming up in Germany, France and the Netherlands] but we will not become over weighted globally.”
“We are also moving into financials, energy and technology” because that is where the growth is, he adds.