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.

Evercore Wealth Management, LLC ("EWM") is an investment adviser registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. EWM prepared this material for informational purposes only and should not be viewed as advice or recommendations with respect to asset allocation or any particular investment. It is not our intention to state or imply in any manner that past results are an indication of future performance. Future results cannot be guaranteed and a loss of principal may occur. This material does not constitute financial, investment, accounting, tax or legal advice. It does not constitute an offer to buy or sell or a solicitation of any offer to buy or sell any security/instrument, or to participate in any trading strategy. The securities/instruments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Specific needs of a client must be reviewed and assessed before determining the proper investment objective and asset allocation which may be adjusted to market circumstances. EWM may make investment decisions for its clients that are different from or inconsistent with the analysis in this report. EWM clients may invest in categories of securities or other instruments not covered in this report. Descriptions provided in this material are not substitutes for disclosure in offering documents for particular investment products. Any specific holdings discussed do not represent all of the securities purchased, sold or recommended by EWM, and the reader should not assume that investments in the companies identified and discussed were or will be profitable. Upon request, we will furnish a list of all securities recommended to clients during the past year. Performance results for individual accounts may vary due to the timing of investments, additions/withdrawals, length of relationship, and size of positions, among other reasons. Prospective investors should perform their own investigation and evaluation of investment options, should ask EWM for additional information if needed, and should consult their own attorney and other advisors. Indices are unmanaged and do not reflect fees or transaction expenses. You cannot invest directly in an index. References to benchmarks or indices are provided for information only. The securities discussed herein were holdings during the quarter. They will not always be the highest performing securities in the portfolio, but rather will have some characteristic of significance relevant to the article (e.g., reported news or event, a new contract, acquisition/divestiture, financing/refinancing, revenue or earnings, changes to management, change in relative valuation, plant strike, product recall, court ruling). EWM obtained this information from multiple sources believed to be reliable as of the date of publication; EWM, however, makes no representations as to the accuracy or completeness of such third party information. Unless otherwise noted, any recommendations, opinions and analysis herein reflect our judgment at the date of this report and are subject to change. EWM has no obligation to update, modify or amend this information or to otherwise notify a reader thereof in the event that any such information becomes outdated, inaccurate, or incomplete. EWM’s Privacy Policy is available upon request. EWM is compensated for the investment advisory services it provides, generally based on a percentage of assets under management. In addition to the investment management fees charged, clients may be responsible for additional expenses, such as brokerage fees, custody fees, and fees and expenses charged by third-party mutual funds, pooled investment vehicles, and third-party managers that may be recommended to clients. A complete description of EWM’s advisory fees is available in Part 2A of EWM’s Form ADV. Trust services are provided by Evercore Trust Company, N.A., a national trust bank regulated by the Office of the Comptroller of the Currency and/or Evercore Trust Company of Delaware, a limited purpose trust company regulated by the Delaware State Bank Commissioner, both affiliates of EWM. Custody services are provided by Evercore Trust Company, N.A. The use of any word or phrase contained herein that could be considered superlative is not intended to imply that EWM is the only firm capable of providing adequate advisory services. This material does not purport to be a complete description of our investment services. This document is prepared for the use of EWM clients and prospective clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of EWM. Any unauthorized use or disclosure is prohibited. The Chartered Financial Analyst and CFA trademarks are the property of CFA Institute. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP® in the U.S.

IRS Circular 230 Disclosure:

Pursuant to IRS Regulations, we inform you that any U.S. Federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for (i) the purpose of avoiding IRS imposed penalties or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. This information is provided for information purposes only and does not constitute financial, investment, tax or legal advice.

©2016 Evercore Wealth Management LLC. All rights reserved.