The purpose of this Memo is to communicate recent updates for EverSource’s portfolio strategy perspectives, investment programs, platform, and presentations to EverSource advisors. EverSource’s most recent Investment Committee Meeting was held in October 2023. If you have any questions about an update, please contact Daniel Phillips, EverSource’s Director of Investments.
Portfolio Strategy Perspective
| Economic & Market Outlook | Inflation, employment, and growth have remained surprisingly persistent given the Fed’s historically quick rate hiking cycle, which is likely reaching its apex. Markets are beginning to reprice in a “higher for longer” interest rate cycle, which will likely pressure multiples for risk assets. The full economic impact of the Fed’s quick rate hike cycle has still not been absorbed by the economy. Risk assets continue to be very vulnerable to drawdowns in this volatile environment. |
| Asset Allocation Views | |
| Equities | Continue to recommend a modest underweight to global equities given elevated valuations and constricting monetary policy. The current narrow rally in the largest cap tech stocks driven by the step-change in AI-innovation has resulted in significant multiple expansion and record concentration within the S&P 500 (top 10>30% of market cap), while most LEIs continue to soften. |
| Fixed Income | As the 10-year Treasury has backed up to 5%, we view the current environment as a favorable time for locking in long-term yields and extending duration of a portfolio. |
| Alternatives | Preference for defensive private market strategies that benefit from market stress (e.g., private equity secondaries) and tightening credit conditions (e.g., U.S. senior secured direct lending). Strategies that rely on higher levels of leverage to achieve target returns are less attractive (e.g., commercial real estate). |
| Cash | Creates optionality to increase equity exposure if economic and market conditions significantly worsen, while earning ~5%. |
| Recommended Reading | JP Morgan: Guide to the Markets JP Morgan: Guide to Alternatives Stephen Nesbitt: Chasing 8% (highly recommend 6-minute video) FAJ: Exclude with Impunity: Personalized Indexing and Stock Restrictions Praxis Mutual Funds: Optimized SRI Index Funds BlackRock: 2023 Global Outlook Q4 Update What to Expect When You’re Expecting (A Recession)? (editable client approved) |
Programs & Products
| Advisor as Portfolio Manager | No updates |
| Firm as Portfolio Manager | Firm as PM Model Performance Model Updates: EverSource Faith-Based ModelsEverSource Multi-Asset ModelsEverSource Multi-Asset (Faith Suitable) ModelsEventide Target Risk ModelsAvantis Strategic Allocation ETF ModelsDimensional Core Wealth ModelsDimensional Core ETF Wealth ModelsDimensional Social Wealth ModelsVanguard CORE ModelsVanguard CRSP Models |
| Separately Managed Accounts | Subadvisor Agreement signed with Vident Advisory for Vident Personalized Portfolios (Strategy Brief). New Approved Strategies (pricing: 34bps): Multi-Factor U.S. All Cap (Value+Profitability+Size)Multi-Factor International All Cap ADR (Value+Profitability+Size)Vident U.S. Large Cap CoreVident U.S. All Cap CoreVident Global All Cap CoreVident International All Cap Core ADR Vident 80% U.S. All Cap / 20% Ex.-U.S. All CapVident 70% U.S. All Cap / 30% Ex.-U.S. All CapSovereign’s Flourish SMA (model delivery only, pricing at 70bps) Overlays: Tax Loss Harvesting, Portfolio Screening (Brightlight), Corporate Engagement (Brightlight, Bowyer), Proxy Voting (Bowyer, Vident) Managed Account Subadvisors: Blackrock Vanguard Personalized Indexing ManagementVident Personalized Portfolios |
| Unified Managed Accounts | Managed Account Strategy Performance |
| Private Markets | Private Market Funds Available Requests: Creation Impact Credit Fund (India) II, LP “CICF II” (Endel Liias)Carlyle AlpInvest Private Markets Fund (CAPM)Marble Capital Income & Impact FundBlackstone Private Equity Strategies Fund (BXPE) Approve: None |
| Held Away Accounts | None |
Platform
| Canoe Intelligence | Canoe Intelligence implementation complete. Contact John Ashcraft ([email protected]) to access your team’s portal. |
Presentations / Upcoming Calls
| Advisor Facing | Vident Personalized Portfolios recording: https://us06web.zoom.us/rec/share/IUf5u1MWz6_w4SPQuxr9cxif-UbGlZhdwUjrq5PrVBZLusVALBiSBgbqz3lqe8wd.qeklHUmcypsTrm8W Passcode: 6?SvUgnu |
| Client Facing | None scheduled. |