in the news

Recent gains in the markets provide a  real opportunity to re-assess wealth plans to make sure they reflect  individual needs and risk tolerance. That was the view at the Evercore Wealth  Management Webinar, The Long Road to Recovery, on April 16, 2020. CEO  Chris Zander moderated a panel led by Chief Investment Officer John Apruzzese  and included Partners and Portfolio Managers Tim Evnin and Brian Pollak.
  
 Other highlights included:

‍

●         Unprecedented  market volatility over the past few weeks have brought the equity markets  back to where they were in the middle of last year. Evercore Wealth  Management portfolios were stressed, but for the most part did not exceed our  modeled maximum drawdown for balanced accounts and we helped our clients  remain calm.

‍

●         The  path forward hinges on a combination of testing, therapeutics and vaccines. A  third of the U.S economy is closed, 22 million unemployment claims have been  filed, and GDP has fallen in the range of 25 to 50%. All of this bad news is  set against the massive stimulus of the CARES Act and the trillions of  dollars the Federal Reserve is employing to support individuals, companies,  municipalities, and the credit markets. The equity markets’ recent run  appears to be in part a reflection of investor optimism that our economy will  enter the recovery phase in the near term. Our assumption is the many efforts  to address the Covid-19 challenges at the therapeutic level will eventually  result in success and the economy will recover.

‍

●         The  recent gains also reflect the heavy weighting of the five Big Tech companies  in the S&P 500 index, which together account for almost 20% of the index  and make it an imperfect reflection of the overall economy.

‍

●         In  the growth portion of clients’ portfolios, the focus has been on upgrading  quality and durability. Entering the recent period of extreme volatility, our  investment team revisited the existing portfolio to test each company’s  ability to withstand the downturn. In parallel, the team sought to find  opportunity to invest in high-quality companies that became mispriced. The  result was several changes – the removal of three companies judged to be at  risk and the addition of two that we believe will weather the challenge. The  team also added to existing positions that appeared to have been overly  punished in the sell-off.

‍

●         Defensive  assets – primarily municipal bonds – were also quite volatile in the quarter  but regained their market value after the panic selling. We remain  comfortable that these assets in client portfolios are indeed defensive and  don’t present default risk even if there is risk of ratings downgrades.  Municipal bond portfolios remain a valuable ballast to equity exposure. In  the more credit sensitive areas of fixed income, the team is looking to  increase exposure selectively in both the liquid and illiquid markets. While  the liquid parts of the market have rallied substantially, opportunities  remain in illiquid stressed and distressed credit.

‍

As we move into the next phase of the  Covid-19-driven economic crisis, there remains considerable uncertainty and  there will likely be additional volatility. Having a wealth plan in place and  sticking to that plan through the volatility remains the best approach to  long-term financial well-being. This is an excellent opportunity to revisit  that plan to ensure that it accurately reflects income needs, risk tolerance  and estate planning strategies.
  
Please contact us for further information or to discuss your individual and  family wealth plans.