Investment Committee: Allocation ChangeSubmitted by Connecticut Wealth Management, LLC on June 24th, 2017
We are writing to inform you that the Investment Committee has approved a change to the construct of our target portfolios. Please note as follows:
The US stock market continues to breach new highs, and for the last several years our portfolios have benefited significantly from a tactical overweight to domestic stocks as US companies outperformed their foreign counterparts by a wide margin during that time. As a result, the pricing of non-US stocks has become more favorable, and while we have been studying these valuations for awhile, we now feel that developed foreign economies are on firmer footing than they were before. These factors have led the Investment Committee to approve a modest increase to the international allocation in our target portfolios.
As we were exploring this allocation change, we were notified that one of the skilled managers we employ in this asset class, who had previously been closed to new investment, recently reopened and is allowing our clients to contribute capital. In some cases, investment managers will stop accepting new investments when they feel like they cannot continue to adeptly maneuver their portfolios if they were to increase in size. However, in recent discussions with this manager, they informed us that the risk-return opportunities they are seeing are attractive enough to allow our clients to add to their existing holdings.
In order to increase our international exposure, we will be trimming the domestic large cap growth allocation. This asset class has performed exceptionally and we are comfortable realizing gains at these valuations. While we are highly sensitive to incurring capital gains in non-retirement accounts, we believe that it is important to fully capture the value of this asset class by trimming at a time when this segment of the market is at historic highs.
As always, if you have any questions, please do not hesitate to reach out to us.