October 18, 2022
By Vanessa Wieliczko, CFA, CAIA, CFP®
Chief Investment Officer, HoyleCohen

A REFECTION ON OUR RECENT MARKET & ECONOMIC DISCUSSION

Markets have been challenged in 2022, impacted significantly by stubbornly high inflation and subsequent interest rate hikes. The Fed is walking a fine line between taming inflation and risking stalling economic growth thereby putting us into a deeper recession. However, strong consumer and corporate balance sheets, and a healthy job market suggest the hit to growth could be moderate. While we remain positive on longer term prospects, we anticipate additional volatility and downside risk in the short run.

This year’s market environment has been challenging even for diversified investors who have seen declines not only in their equity investments but also in their fixed income allocations as bonds adjust to the forward-looking expectations of rising rates. US Equities as measured by the S&P 500 are down approximately 24%, international developed and emerging market equities are down 27%, the aggregate bond index is down 15%. The result is a 60/40 portfolio, comprised of 60% equities and 40% fixed income, with returns down 20-23%. Clients with heavier allocations to shorter duration government debt and alternatives like energy, real estate, private equity, and private credit have fared better, in some cases outperforming benchmarks by 5% or more.

We will continue to maintain discipline, taking opportunities to rebalance and tax loss harvest where appropriate. When deploying large allocations of cash we will dollar cost average, buying in multiple tranches over several months. Our Investment Committee continues to reassess asset allocation decisions in light of evolving data, yet remains focused on long-term investment decisions.

As always, we appreciate your confidence and support as we seek to build portfolios for the long run. If you or someone you know would benefit from speaking with a HoyleCohen Advisor, we encourage you to reach out.

Sincerely,

Vanessa Wieliczko, CFA, CAIA, CFP® & the teams at HoyleCohen

Your Hosts:

Kent Chan
Equity Investment Director
Capital Group

Kent Chan is an equity investment director at Capital Group. He has 30 years of investment industry experience and has been with Capital Group for six years. Prior to joining Capital, Kent spent more than 20 years in Asia, most recently as a director of equity research for Greater China at Barclays. Before that, his research responsibilities included global technology, Asian consumer and small cap companies at Citigroup. He holds a bachelor’s degree in political economics from the University of California, Berkeley. Kent is based in San Francisco.

Vanessa Wieliczko, CFA, CAIA, CFP^®,
Chief Investment Officer, Partner
HoyleCohen, LLC

Vanessa Wieliczko oversees the firm’s investment department and leads the Investment Committee. She joined HoyleCohen in 2008 and helped develop the firm’s CorePlus approach, a unique blend of traditional and alternative assets. Vanessa holds a Bachelor’s degree in business administration and management with a concentration in international finance from Boston University.

Driven in pursuit of excellence, Vanessa obtained her Chartered Financial Analyst, Chartered Alternative Investment Analyst, and Certified Financial Planner designations all before turning 30. Active in the community, Vanessa serves on the board as President of the CFA Society San Diego, a group of more than 500 investment professionals.

Compliance Disclosure

HoyleCohen is a fiduciary acting on behalf of our clients. We are a fee-based investment advisor and do not receive commissions for any investment strategies of products that may be discussed. This discussion was intended for informational purposes only. No decisions regarding investment strategies should be made based solely on this presentation and nothing shared should be interpreted as investment advice. Any investment decisions should be discussed with your Advisor. Finally, all investments carry the risk of loss, including the permanent loss of principal and past performance is not a guarantee of future results.