RegentAtlantic’s investment approach to address the ongoing Covid-19 crisis involves a greater emphasis on well-capitalized U.S. large-cap stocks and some de-emphasis of international equities, while the company patiently waits for signs the worst is over and recovery has begun.

Chris Cordaro, the chief investment officer at the firm overseeing some $4.3 billion in assets, said he’s started reallocating equity assets into large company, high-quality U.S. stocks.

“Generally, we will look for investments in companies that have low debt [levels] and high growth rates, which are less sensitive to economic shifts,” said Cordaro, who laid out his strategy in RegentAtlantic’s first quarter letter to investors. “We believe these attributes will put companies in a better position to weather the Covid-19 crisis.”

He said he is trimming stock allocations in developed international countries and emerging markets to make way for increased U.S. stock allocations.

“We believe foreign stocks continue to be an important part of well-diversified portfolios, and as such, we are only trimming the allocation. In our view, these investments offer good return potential and a different pattern of returns, which reduces risk.”

The incremental portfolio changes are based on the firm’s belief that “we have some time to go before we can see the worst ahead. While we are being patient before rebalancing, we are also analyzing current conditions and asset classes, as well as modeling the best paths forward under a variety of scenarios,” Cordaro said.

He is also selling off infrastructure investments that have been affected by tax code changes—like oil and gas pipelines. “We will be eliminating investments in that asset class and reallocating those investments to U.S. large-company stocks,” Cordaro said. “Overall, this asset class has been disappointing because it has correlated closer to the price of oil than we anticipated. We no longer believe infrastructure is a viable asset class.”

Because the stock market has declined much more than the bond market, he said, rebalancing will mean selling some bonds to buy stocks.

While he is rebalancing these positions, he anticipates portfolio realignment. “When we realign, we will only reposition assets that are currently in stocks to other stock investments. We are not rebalancing or moving money from bonds into stocks. That will only occur when we rebalance the portfolio,” he added. 

Right now, he said that RegentAtlantic is “patiently waiting … biding time until we see the indications that the worst of the storm is in sight” before full-scale portfolio rebalancing.

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