CTWM Investment Committee: Portfolio UpdateSubmitted by Connecticut Wealth Management, LLC on June 10th, 2016
The Investment Committee has approved two changes to the construct of our target portfolios:
CHANGE 1 – Reduce High Yield Bonds and Municipal Bonds
We have authorized a change that will cut in half the allocation to high yield bonds and to municipal bonds. Both high yield and municipals have performed well recently relative to other bond asset classes, and as a result, we believe that the opportunity moving forward is less attractive than it was prior to this positive performance. You might recall that we increased the allocation to high yield bonds earlier in the year to take advantage of compelling opportunities at that time, and because your portfolio since then has been rewarded by having this higher allocation, we believe that locking in the gains at this time is prudent.
We will be reinvesting the proceeds from these transactions into the Vanguard Total Bond Market Index (ticker: VBTLX). You may be familiar with the Vanguard fund family, which is known for offering low-cost access to asset classes. This particular fund falls into that category and is appropriate given the current state of interest rates and how the rest of the bond portfolio is positioned.
CHANGE 2 – Replace the Oakmark International Fund
Many of you hold the Oakmark International Fund as your exposure to developed, non-U.S. stocks. We have voted to replace this fund because some of the security-specific decisions Oakmark has recently made have fallen outside of the risk parameters it had outlined when we made the initial decision to invest, and we have lost confidence that this fund is the best option in this asset class.
With the proceeds, we will be investing in the Oppenheimer International Growth Fund (ticker: OIGYX), a fund we believe is better positioned to take advantage of the most attractive risk/return opportunities outside of the United States. This move is simply a change in manager and the allocation to this asset class will not change.
Please feel free to contact us with any questions.