SNW Asset Management on Growing Assets through the Eurozone Crisis - Eddie Bernhardt, SNW Asset Management

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Eddie Bernhardt, Senior Portfolio Manager and Managing Director of SNW Asset Management, on how the Eurozone debt is affecting the US private wealth management industry.

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SNW Asset Management on Growing Assets through the Eurozone Crisis - Eddie Bernhardt, SNW Asset Management

  1. 1. IFG WEALTH MANAGEMENT FORUMTHE PREMIER EVENT FOR NORTH AMERICAN FAMILY OFFICESApril 23-24, 2012, The Ritz-Carlton, Phoenix, Arizonawww.ifgwealthmanagement.comSNW Asset Management on GrowingAssets through the Eurozone CrisisFOR IMMEDIATE RELEASEIn today’s globalized world, US investors could be just strong balance sheets and limited exposure to Europe, ifas vulnerable to the Eurozone sovereign debt crisis as any. This means there are good bonds available rightEuropean investors. Limiting exposure to European now, but investors need to know where to look for them. Interview with:assets is not enough – there could be underlying Eddie Bernhardtcounterparty risks. However, “Waiting for the The opportunities are not necessarily in European banks Senior Portfolio Manageruncertainty to subside could result in missed – there is still a lot of uncertainty and volatility – but the and Managing Directoropportunities”, according to Eddie Bernhardt, Senior sell-off has made healthy US banks and finance SNW Asset ManagementPortfolio Manager and Managing Director of SNW companies cheaper.Asset Management. Eddie Bernhardt, Senior What is your outlook on the fixed income market? Portfolio Manager andAhead of the IFG Wealth Management Forum 2012 in What are the opportunities in that space? Managing Director of SNWPhoenix, Arizona, April 23-24, Eddie Bernhardt discusses Asset Management, on howhow private wealth managers can ensure investment Eddie Bernhardt – Investors should prepare for volatility. the Eurozone debt isportfolios thrive despite the Eurozone uncertainties. Treasury rates at such low levels and economic affecting the US private uncertainty will lead to bond prices swinging around a wealth managementHow can private wealth managers in North fair amount. Fixed income investors cannot assume that industry. SNW AssetAmerica shield their clients’ assets from the bond markets will be stable and safe. Management will be presentEurozone debt crisis? at the upcoming IFG Corporate bonds with wide credit spreads are offering Wealth ManagementEddie Bernhardt – Wealth managers need to look at some value today, but it is not as easy as picking an Forum 2012.their clients’ overall exposure to the sovereign entities index fund that has experienced a sell-off and riding itand banks with a large exposure to the countries out. There is value out there in specific municipal,experiencing a debt crisis. It is not simply about corporate and government backed securities, you justconsidering their exposure to European or global equity have to know where to look. Sitting in cash and waitingmutual funds, but also to the money market mutual for rates to go up is not advisable. Earning zero versusfunds and the counterparty risks of US banks. Some of owning a short-term, low volatility portfolio of bondsthe large US broker dealers have substantial European that will mature in less than five years would give atcounterparty risks. least one or two per cent.The mutual fund disclosure or the financials of a large How could investors maximize returns on fixedbrokerage firm will not give wealth managers all the income assets?information they need. Some digging and interpretationis essential. This means a lot more work for US wealth Eddie Bernhardt – First, you have to know your client’smanagers. risk tolerances and investment objectives. Every portfolio we construct is client specific and can beWhat investment opportunities has the European customized to meet their unique needs. Second, look fordebt crisis brought about? the strongest credits and bond structures in today’s market, which should include out of favor sectors. Third,Eddie Bernhardt – We have seen the typical panicked monitor portfolios daily to assure the holdings continuesell-off. Most finance companies bonds spreads have to offer a good risk-reward trade-off for the client. Oftenwidened, bond prices have declined, and yields are up. It times the way to maximize returns is not to buy thedoes not matter to the market if these entities have bond with the highest yield, but to look for bonds withexposure to Europe or not. The markets are throwing all attractive yields relative to their credit quality. This canfinance into the same bucket, including companies with give investors the added benefit of price appreciation. www.internationalforumgroup.com
  2. 2. IFG WEALTH MANAGEMENT FORUMTHE PREMIER EVENT FOR NORTH AMERICAN FAMILY OFFICESApril 23-24, 2012, The Ritz-Carlton, Phoenix, Arizonawww.ifgwealthmanagement.comWhat advice for making a fixed income portfolio tax-efficient could you share?Eddie Bernhardt – Tax efficiency can come in the form of tax free municipal bonds or capital gains management. First, we make sure to know theclients’ marginal income tax rate and how tolerant clients are to taking short or long term capital gains. If they are in the 25 to 28 per cent bracket,corporate bonds after tax make a lot of sense. If the client wants to limit or maximize capital gains in the portfolio we manage, it is noted. In highincome tax states, state-tax free government agency bonds may make sense. Doing the tax math and moving clients in and out of investment gradesectors would give them a higher effective return.What is unique in your approach to finding value in the marketplace?Eddie Bernhardt – We manage separate accounts to each client’s investment objectives and we open up the financials and dig in to the credits wemonitor. That is how we maximize returns for each client and that is how we find value. By having a clear understanding of the risks inherent in eachbond we purchase, we can find opportunities in undervalued securities while avoiding overvalued bonds. Investors should not depend on the creditrating agencies, index funds, or generic fixed income strategies for their high net worth clients. Rating agency models are flawed and genericproducts aren’t built to meet your client needs. By looking across the municipal, corporate, and government bond markets we are able to buildportfolios that fit a client’s unique needs. Investing is really about doing research, finding your own value in the marketplace, and executing a strategybased on that for each client.Salpi Balian, Press Manager – IFG, pressifg@ifgemea.comThe IFG Wealth Management Forum 2012IFG’s Wealth Management Forum 2012 will take place at the Ritz-Carlton, in Phoenix, Arizona, April 23-24, and provides a unique platform forinvestment decision makers from single and multi-family offices to engage in vibrant benchmarking sessions and gain practical solutions and bestpractices to achieve optimal portfolio returns.For more information please send an email to pressifg@ifgemea.com or visit the event website at www.ifgwealthmanagement.comThe International Forum GroupInternational Forum Group is a world-leading business information company, organizing exclusive, invitation-only gatherings of business leadersacross multiple industry sectors.Providing a platform for senior executives to build mutually beneficial business partnerships, International Forum Group has designed an unparalleledsystem for matching the core buying needs of the world’s largest organizations with the best solutions available in the global marketplace.Empowering all our clients with the knowledge they need to lead in their respective fields is a fundamental goal of all our forums.For more information, please visit: www.internationalforumgroup.comSNW Asset ManagementSNW Asset Management is a fixed-income investment management firm. Its sole focus is the active management of separate accounts that areuniquely tailored for each client. They conduct in-depth credit research on each individual bond held, which eliminates dependency on rating agenciesand allows them to maximize yield while controlling risk.www.snwam.comAll rights reserved. The above content may be republished or reproduced. Please notify prior to usage at pressifg@ifgemea.com www.internationalforumgroup.com

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