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Gazing into the Crystal Ball

I love the “crystal ball” predictions at the start of every year. Please hear me, I’m a risk analyst and thus a skeptic by training, so I expect very few of these predictions to be correct. What I love about them, is that they bring up top topics of concern and of opportunity. These forecasts provide such a fertile starting spot to dig into the work by which we have been entrusted: managing the long-term balance between risk and return.

I’d like to share the types of conversations that these fortune tellers have sparked here at ThirtyNorth:

  • Can we expect market volatility in this election year? Our perspective here at ThirtyNorth is long-term, so short-term volatility in a period running up to an election is unlikely to change our investment strategy; however, elections create a period of uncertainty that deserves attention as we attempt to hold steady on our long-term objectives. In an incumbent election year, these volatility predictions remind us to keep our focus on policy shifts that may have long-term economic impact.
  • What are the risks and rewards within the growing BBB debt space? Although bonds with BBB ratings from Standard & Poor’s are viewed as investment grade, they have been assigned the lowest credit quality of this grade. Many are wondering if a large portion of BBB debt is at greater risk of default than implied by their ranking. As noted in a recent Barron’s article, some expect up to 20% of BBB, which equates to about $660 billion in debt, to be downgraded from investment to non-investment grade during 2020.1 This is not a new conversation at ThirtyNorth, as we have been working to minimize BBB debt in our investment grade fund selection for a while now. As these cards are still being read, we are examining who wins and loses with (and without) a large downgrade scenario.
  • Are Environmental, Social, and Governance (ESG) themed funds as advertised? With the expectation of large demand for ESG products, the marketplace is beginning to see a flood of products claiming to make investment decisions that promote ESG themes. As a firm with a mission to bring together money and meaning, we are excited for the opportunities to invest in products that are actively engaging companies on issues that our clients value; however, we are finding that fund ESG claims aren’t always reflected in their decision making. We are analyzing investment options, looking to engage with fund companies, and working on curating a list of funds that we find live out their stated mission.

You’ll hear more from us on these topics and others over the next few months, but as always, we would love to hear from you about the issues that make you feel encouraged or worried about your investments. Fortune tellers are always welcome here.

Sarah Bomhoff

1Jasinski, Nicholas. “A ‘Ponzi Market’ Is Developing in Corporate Bonds. Here’s What That Means.” Barron’s, Dow Jones & Company, Inc., 22 January 2020, https://www.barrons.com/amp/articles/bonds-corporate-high-yield-investment-ponzi-easing-central-banks-yield-squeeze-treasuries-51579641764



  • All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. It should not be regarded as a complete analysis of the subjects discussed.
  • Information presented does not involve the rendering of personalized investment advice and should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Tax information is general in nature and should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
  • Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. All investment strategies have the potential for profit or loss. There are no guarantees that an investor’s portfolio will match or outperform any particular benchmark. Index returns do not represent the performance of ThirtyNorth Investments, LLC, or its advisory clients.
  • ThirtyNorth Investments, LLC, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.

Feeling More SECURE in Retirement

If you think that concerns over one’s ability to retire are limited to the young, think again.

Sure, younger generations are saddled with unprecedented student loan debt, and they can no longer count on Social Security as a guaranteed source of income in their later years, as their parents and grandparents could. But a 2019 Northwestern Mutual survey also found that nearly one in five Baby Boomers has less than $5,000 saved for retirement. 1

Read that again: one in five Baby Boomers has less than $5,000 saved for retirement. And 15% of Americans have no retirement savings at all.Similarly, a recent study of all Vanguard retirement plans revealed that the median retirement balance is just $22,000.2

Simply put, many Americans now expect to outlive their retirement savings. Is there anything we, as a system, could have done—or more importantly, can do—to help curtail this looming retirement crisis?

In our many years assisting clients as they plan for, approach, and navigate retirement, we have seen time and again that one of the most valuable tools for adequate retirement investment is an employer-sponsored retirement plan. And yet, about half of U.S. businesses do not offer their employees a company-sponsored 401k retirement plan.

Beyond limited access to employer-sponsored plans, individuals today face a host of challenges when it comes to regulations around retirement planning. To name just a few: people are limited as to how long they can contribute to their retirement plans, penalized for early withdrawals (which may defer younger employees worried about near-term liquidity), and may be forced to distribute funds (i.e. terminate the benefit of tax-deferred growth) before they’re ready.

Which brings us to the SECURE (or Setting Every Community Up for Retirement Enhancement) Act, which recently passed in the House in a whopping 417-3 vote and is currently under consideration in the Senate. This bill will meaningfully enhance employees’ ability to better prepare for retirement. Among its nearly 30 provisions, the SECURE Act:

  • Makes it easier and more affordable for small employers to sponsor retirement plans by joining together with other small businesses.
  • Provides incentives for smaller employers to add automatic enrollment.
  • Increases the age at which a participant is required to take distributions from 70.5 years currently to 72 years. This extended tax deferred growth could yield meaningful extra savings.
  • Repeals the maximum age for IRA contributions. With many people working later in life, repeal of the current age limit (70.5 years) extends the benefit of tax deferred savings for as long as an employee chooses to keep working and contributing.
  • Exempts individuals from the 10% penalty tax for up to $5,000 in early distributions following the qualified birth or adoption of a child. This type of flexibility encourages young plan participants to save more, with the security of knowing they can withdraw funds for this purpose penalty-free.

As debate continues in the Senate, some focus is now being put on an additional provision of the SECURE Act, which eliminates the “Stretch IRA”. Today, you can leave your retirement account to your spouse, child, grandchild, or other beneficiary, who can then parcel out distributions over the course of their lifetime; in the case of a child or grandchild, this could significantly extend (or “stretch”) the lifetime of the IRA’s tax-deferred compounding and result in a sizeable inheritance. The SECURE Act, however, requires any non-spouse beneficiary to distribute the entire IRA within 10 years, which could curtail the tax-deferred benefits to the inheritor.

However, retirement plans were designed to enable retirement, not inheritance. We should be more concerned with the SECURE Act’s retirement planning benefits than its estate planning implications. Our priority must be to address a retirement system in dire need of improvement, a system that is not preparing our nation’s workers for a comfortable and timely retirement. By encouraging greater savings in a myriad of ways, the SECURE Act would represent much needed progress.

Keep your eyes and ears open for news on the bill’s progress in the Senate, and—as always—if you have any questions about your own retirement planning or how new regulations might impact your investment strategy, please do not hesitate to reach out to our experienced team of advisors.


Suzanne T. Mestayer



2 https://pressroom.vanguard.com/nonindexed/Research-How-America-Saves-2019-Report.pdf



  • All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. It should not be regarded as a complete analysis of the subjects discussed.
  • Information presented does not involve the rendering of personalized investment advice and should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Tax information is general in nature and should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
  • Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. All investment strategies have the potential for profit or loss. There are no guarantees that an investor’s portfolio will match or outperform any particular benchmark. Index returns do not represent the performance of ThirtyNorth Investments, LLC, or its advisory clients.
  • ThirtyNorth Investments, LLC, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.

When to Crack Your Nest Egg: Part II

In our January blog post, we explored the question of when to retire—more specifically, the portfolio implications of retiring at what could be the beginning of a bear market. In light of recent volatility in public markets and anticipation of a long overdue downturn, sequencing risk is of particular interest to clients approaching or considering retirement—and understandably so.

For those who cannot or don’t want to wait to retire under more favorable market conditions, there are specific strategies we recommend for mitigating sequencing risk. These contingency plans help us to focus on those things we can control and to feel more confident in our preparation. Before cracking that nest egg, we suggest you consider:

Retirement Buckets

A distribution or “bucket” strategy provides short-term certainty without sacrificing long-term security by divvying up your retirement funds into buckets that differ in asset type, purpose, and time frame. For example, you might create three buckets as follows:

  • Cash (or cash equivalents) to be used for the upcoming year or two of expenses. This provides a regular source of cash without feeling pressured to liquidate other investments at an inopportune time; instead, those assets can stay invested while waiting for the market to rally.
  • Bonds and fixed-income investments, which are less prone than stocks to suffer significant market downturn. A properly structured bond portfolio can serve as a well-defined annual source of investment income to help replenish Bucket 1 if needed.
  • Stocks (or other equity investments) to sustain the nest egg for the long term. When market performance exceeds expectations, the excess appreciation can be used to replenish Buckets 1 and 2 if needed. On the other hand, when performance disappoints, Buckets 1 and 2 carry you through without having to sell stocks at a point of lower (or no) returns, providing critical peace of mind to stay the course and ride out market volatility.

Flexible Budgets

Spending needs change over time, and the same is true during retirement. Perhaps you hope to enjoy lower budgetary needs now that the kids are grown; perhaps your medical costs will unexpectedly rise in the years to come; or perhaps you hope to celebrate your freedom with an extravagant trip abroad.

We strongly encourage all our clients – not just those facing possible sequencing risk – to take a hard look at how they currently spend their money, set honest expectations around how those budgetary needs might change (for better or worse) during retirement, and quantify the cash flow realistically needed to retire. During this exercise, build in flexibility by identifying any items which might be postponed or eliminated should the market turn (for example, that trip abroad can probably wait, while medical expenses probably can’t).

Additionally, withdrawing a percentage of your retirement funds each year – rather than a fixed amount – further mitigates sequencing risk by reducing the impact of your withdrawals on top of the impact of lower returns. However, this strategy requires that you be able to live within a spending range that might fluctuate from one year to the next based on market performance, rather than adhering to a fixed annual budget.

Withdrawal Sequencing

Be thoughtful when prioritizing accounts for withdrawals. While fulfilling your Required Minimum Distribution amounts from your IRA or 401(k) comes first, consider following with more tax efficient non-taxable withdrawals from an HSA or Roth account.  Individual situations may vary, so be sure to work with a tax advisor to optimize the impact on your tax liabilities.

Buffer Asset Inventory

Take stock of any assets you may have that can be used, if necessary, to buffer cashflow shortfalls during a market downturn. Consider the cash surrender value of a life insurance policy, or selling that rarely used lake house. Despite the negative reputation of reverse mortgages, there are situations in which even these can be effective tools for supplementing retirement income.

Of course, you may choose to employ one, two, or all of these mitigating strategies to best prepare yourself for retirement, even if the market’s timeline doesn’t seem to align with yours. When in doubt, always seek the advice of a professional who can help you weigh your options and develop a thoughtful, well-rounded retirement plan that ensures you spend those golden years focused on filling the soul, not the coffers.


Suzanne T. Mestayer


For disclosures, please click here.


When to Crack Your Nest Egg

Retirement: it’s a phase of life many look forward to, but it’s also one of the hardest to plan.  Sure, there’s the question of how much, often referred to as your “number”—the amount of savings you’d need to be able to comfortably retire. Conventional wisdom has long relied on the “4% Rule” to help hopeful retirees calculate this number: the annual income you want or need throughout retirement (not including Social Security income) should represent 4% of your total savings upon retirement. So, if you’re targeting $150,000 in annual retirement income, you’ll need $3.75 million saved the day you retire.

While this rule of thumb may be helpful in its simplicity, that simplicity can leave many ill-prepared for the financial realities of retirement.

While the 4% Rule asks how much, it doesn’t ask how long. The 4% Rule assumes a 30-year retirement. If you don’t expect to live that long, perhaps you don’t need the full $3.75 million. Then again, if you midjudge your longevity, you could deplete your savings years too soon.

The 4% also doesn’t ask how you expect to live during retirement. In our experience, clients often underestimate how much their current lifestyle really costs, while they overestimate their ability to remain healthy and independent as they age.

Perhaps most importantly in our current market, the 4% Rule fails to ask when.

And when it comes to retirement, it’s not just a question of how big your nest egg is. It’s also a question of when you crack it.

Let’s suppose for a moment that you’ve worked to accurately quantify your retirement needs. You’ve even built in some you wiggle-room for unexpected expenditures. You feel confident in your $3.75 million nest egg number, and you plan to withdraw $150,000 a year. So long as the market is able to return 5% on your investments, your calculations tell you you’re headed for a long, financially secure retirement.

However, in your second year of retirement, the market takes a significant downturn. Suddenly, instead of the 5% return on your investment you’d planned for, your portfolio is now yielding a -12% return rate, as you continue to make withdrawals. After several years, the market rallies, and over the course of your entire retirement, your portfolio still manages to average 5% returns over time. However, averages can be deceiving.

Thanks to that drop in the market early in your retirement, you ate into your nest egg at a faster rate than anticipated, meaning any future market gains were made on a smaller egg. The earlier in your retirement you face a bear market – or worse, a recession – the more magnified is its negative impact and the harder it is for your savings to rebound. This is known as sequencing risk, and it’s of particular concern to those looking to retire just as the market prepares for a downturn.

The fourth quarter of 2018 was certainly such a downturn, and there continue to be predictions of a deeper bear market and possibly a recession.  And while it’s unclear if or when these predictions will come true, those approaching retirement must consider if, when, and how to do so in the face of such uncertainty. Some may decide to continue working to provide extra cushion for their nest egg.   For those who cannot or don’t want to wait, there are specific strategies we recommend for mitigating sequencing risk, including asset allocation strategies, distribution or “bucket” strategies, and flexible spending strategies. These contingency plans will be explored in subsequent blog posts; please stay tuned.


Suzanne T. Mestayer


For disclosures, please click here.


So You’re Interested in Sustainable Investing? Consider This…

As discussed in my last blog post, sustainable investing may be one of the most important investment trends of the next decade. It offers investors positive social impact alongside financial returns, and it is catching the eye of individual and institutional investors alike. Globally, more than $1 out of every $4 under professional management is invested sustainably1, as investors—especially women and Millennials—increasingly strive to align their investments with their values. Opportunities for investing sustainably now exist across all asset classes, from private to public, from real estate to fixed income to hedge funds.

However, as with anything new—from a self-driving car to a new job offer to a smartphone software update—we must consider both the benefits and the shortcomings of sustainable investing` before we go all-in. We must proceed with a healthy dose of caution as the market irons out the kinks.

The sustainable investing “movement” is still under development, with much work still to be done to clarify and standardize what it is, how it works, and what success looks like. Even the language used in this space is inconsistent, causing confusion around the various sustainable investment strategies and their nuances. Consider the following terms, often (erroneously) used interchangeably:

  • Socially Responsible Investing (SRI) uses a negative screen for companies believed to offer socially undesirable products or services, like tobacco.
  • Impact Investing focuses on using financial investment to address societal and/or environmental challenges, though many believe this occurs primarily through private markets.
  • ESG Investing evaluates a company’s environmental, social, and governance practices as part of an integrated investment selection process.
  • Thematic Investing (like ThirtyNorth’s Women Impact Strategy) is a more targeted method of addressing specific issues (in our case, a gender lens) in the investment selection process to address gender gaps and disparities. It is often a subcategory of Impact or ESG investing.

Next, consider the lack of standardization around performance evaluation. For starters, it’s not clear what “success” looks like in sustainable investing. Traditionally, higher financial returns have defined higher performance. When it comes to sustainable investing, however, the equation isn’t quite as simple. For some investors, positive social impact may be the end game, even if it means lower financial reward. Others believe a social impact screen is in fact the best path to greater financial outcomes. And other investors live everywhere along the spectrum.

Making matters even more challenging, there are no established and broadly accepted performance metrics, standards, or rating systems in this space. The companies being evaluated for ESG typically self-report these behaviors, introducing ample opportunity for bias. Asset managers and financial advisors offering sustainable investment products often must rely on a limited track record and hypothetical back-testing to demonstrate results. It appears that some companies are even rebranding existing funds as sustainable investment products, regardless of how marginal the ESG or social impact may be.2 These issues make it hard for investors to assess how a particular investment option aligns (or doesn’t) with their goals and nearly impossible for them to make apples-to-apples comparisons across companies, funds, and products. It is no surprise, then, that 70% of institutional asset owners surveyed by Morgan Stanley said that the lack of quality ESG data is one of their biggest challenges when investing sustainably.3

Finally, though numerous sustainable investment products are already on the market or under development—including offerings from virtually every major fund company—many financial advisors have not yet turned their attention to these offerings and may be uninterested in learning about them and/or ill-prepared to discuss them.

So, before diving in…


  • Think carefully about who you choose as a partner to guide you through this new terrain,
  • Be sure you and your financial advisor are speaking the same language and are aligned on how you will measure the success of your sustainable investment strategy, and
  • Before accepting the promise of something new at face value, push yourself to dig beyond the hype and review a fund or product for both quality and methodology.


Suzanne T. Mestayer


1 Global Sustainable Investment Alliance 2016 Report

2 It is Difficult to be an Ethical Investor, Wall Street Journal, September 4, 2018

3 Understanding ESG Ratings: A Brief Primer from Celent, ThinkAdvisor, August 6, 2018


Bringing Together Money and Meaning: More Than a Tagline

At ThirtyNorth Investments, we steadfastly believe that investment decisions begin and end with an understanding of what money means to you (so much so that we made it our company tagline: Bringing Together Money and Meaning). After all, people don’t seek to accumulate wealth just for the sake of it; they do so with a goal in mind—a vision of how money will help make their lives, their children’s lives, their community, or their world better tomorrow than today.

What we didn’t anticipate when we chose this tagline was that it would foreshadow what is being considered the most important investment trend of the next decade.

Impact Investing—also known as Sustainable Investing or Environment, Social, Governance (“ESG”)—offers investors positive social impact alongside positive financial returns. Not to be confused with philanthropy, Impact Investing is predicated on the belief that companies that act responsibly with regard to ESG perform better financially.

This burgeoning investment strategy was the focus of Barron’s first Impact Investing Summit earlier this summer, where one thing was made clear: Impact Investing is here to stay.

Seeing the opportunity to amplify their financial gains while also encouraging socially responsible corporate behavior, it’s no wonder more and more investors are adopting investment strategies that incorporate an ESG lens:

  • 70% of institutional investors say they are integrating sustainable investing into their investment process1
  • The majority of millennials, Gen X and women believe that a company’s track record in environmental, social and governance is an important consideration for investing. In fact, 37% of all high net worth investors are reviewing their portfolios for impact investments2
  • 90% of women surveyed globally said making a positive impact on society is important when considering investment decisions, and 77% indicated that they want to invest in companies with diversity in leadership3

However, while it’s just now hitting the investment mainstream, Impact Investing is not entirely new. In fact, ThirtyNorth Investments created our own Impact Investing offering, the Women Impact Strategy, more than two years ago. A carefully crafted portfolio of 50 companies with gender diversity among their corporate leadership teams, we created the Women Impact Strategy after reviewing data4 that demonstrated what we already intuitively knew: companies with more women at the top deliver excess returns.

We are proud to be counted among the individuals and organizations acting early and with conviction in the Impact Investing space, including hedge fund manager Paul Tudor Jones (whose JUST ETF, which ranks companies based on their social impact, launched this summer) and Blackrock CEO Larry Fink, who wrote to his investors earlier this year, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

I continue to be amazed by the breadth of companies offering new ESG funds every day. As Impact Investment options continue to grow, so too do the possibilities for making more money, and for making that money more meaningful. It is a wonderful sign of things to come.

1Sustainable Signals: Asset Owners Embrace Sustainability, Morgan Stanley Institute for Sustainable Investing  June 18, 2018

22018 Insights on Wealth and Worth, U.S Trust, 2018

3 Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth, Center for Talent Innovation, 2014

4 The CS Gender 3000: The Reward for Change, Credit Suisse Institute, September 2016

All investment strategies have the potential for profit or loss.  There are no assurances that an investor’s portfolio will match or outperform any particular benchmark.


July 24, 2018   By Suzanne Mestayer


ThirtyNorth Investments Welcomes Mary Willis to the Team

We are delighted to introduce the newest member of our ThirtyNorth Investments team, Mary Willis.

Mary joins us as a Financial Associate and will focus on all investment and planning related activities, including portfolio analysis, investment monitoring, and research for our investment committee.  Mary previously served as an equity research associate at Johnson Rice & Company.  Mary’s experience included bottom-up and top-down analysis of stocks, as well as US and global macro-economic and market trends.


Mary earned a Masters in Energy Management from Tulane University’s Freeman School of Business.  She also obtained a B.A. in History with Honors (Energy Concentration) from Georgetown University, where she graduated Magna Cum Laude and as a member of Phi Beta Kappa.


What are Multiple Employer Plans (MEPs)?

Multiple Employer Plans (MEPs) have been around for decades, yet, many people have never heard of this type of retirement plan.  A multiple employer plan is a plan maintained by two or more unrelated employers.  MEPs are often coordinated via a trade or business association.  For example, an MEP could be sponsored by a state dental association or a group of companies spread across the U.S. that share a common nexus, such as auto part manufacturers.

Why consider forming an MEP?

Let’s expand upon the concept of an auto manufacturer MEP.  Taking advantage of economies of scale, each auto manufacturer that adopts into the MEP shares in the benefits of its collective structure.  By pooling their investments, administration and governance structure, the MEP members could garner greater efficiencies and purchasing power. MEPs are formed to minimize costs while adding value-added services, typically offered at a premium to stand-alone retirement plans.  Just as important, plan sponsors can often minimize their fiduciary liability by participating in an MEP.

What are some of the main benefits of MEPs?

Plan Costs – By participating in an MEP, plan sponsors can potentially benefit from a reduction in:

  • Staff time and labor used to administer the plan
  • Recordkeeping costs
  • Plan audit costs
  • Investment expenses
  • Form 5500 costs
  • Plan amendment and restatement fees

Administration – Employers can outsource many of the responsibilities associated with plan administration to the MEP sponsor.  Some of these duties include:

  • Approving loans and hardship withdrawals
  • Approving distributions and qualified domestic relations orders (QDROs)
  • Plan document and operational compliance
  • Form 5500 administration
  • Plan audit, when applicable

Investments – Employers can benefit from the aggregate plan`s assets and by being able to outsource investment management responsibilities.  Some of the benefits include:

  • Investment menu selection
  • Ongoing investment monitoring
  • Access to institutionally priced investment options

Governance – Employers can outsource certain plan sponsor roles to the MEP

  • The MEP is structured to assume an administrative fiduciary role
  • The MEP is structured to assume the investment fiduciary role
  • The member company shifts its Fiduciary liability to the MEP

Though you may not have heard of an MEP, they are quite common in the corporate 401k space.  They are also gaining popularity with legislators, who want to provide coverage for small businesses (regardless of a common nexus) that are not offering employees any type of vehicle for retirement savings. These are called “open” MEPs and a timely reference is the Retirement Enhancement Security Act (RESA) of 2018. Further, we are seeing higher education organizations create MEPs that are structured as a 403(b) plan rather than a 401(k).  For example, 14 independent colleges in Virginia recently decided to create their own MEP to share in the outsourcing of education and advice, the monitoring of investments and fees, administration and fiduciary responsibilities.

MEPs come in all shapes and sizes and even offer sponsors flexibility with different plan designs. However, MEPs must adhere to certain plan qualification rules under IRC 401(a), such as with vesting, eligibility and distribution rules.  In other words, some of the rules may apply to the aggregate plan while others to the adopting plan sponsor.  Here is additional insight.

Hopefully, you now know a little more about Multiple Employer Plans and don’t confuse them with other plan types.  Quite often, people mistakenly refer to them as Multiemployer Plans, which are those created for unrelated companies covered under a collective bargaining agreement.  But, that is a whole other story.

For further information, please contact us at info@www.thirtynorth.com


1st Quarter 2018 Market Commentary

“What a long, strange trip it’s been” – Jerry Garcia, Bob Weir, Phil Lesh, and Robert Hunter

The US stock market burst energetically out of the gate in January. Fresh off double digit gains last year, the tech heavy NASDAQ index crossed 7,000 for the first time on January 3rd. At its peak on January 26th, the S&P 500 Index was up almost 7% in the first three weeks of the year. Nine trading days later, the market entered correction territory by dropping more than 10% from that peak. The remainder of the quarter was volatile, and half of the remaining trading days saw moves greater than 1.0% in the S&P 500 Index. The S&P 500 finished the quarter down -0.76%; a long, strange trip indeed.

For the quarter, International stocks, as measured by the MSCI EAFE Index, slumped along with the US, and were down -1.04%. Emerging market stocks, however, continued their leadership. The MSCI Emerging Market Index was up 1.42%. Continuing a trend from 2017, growth stocks led value stocks amongst large, mid, small and international stocks. Interest rates rose, and bonds prices suffered. The Bloomberg Barclays US Aggregate bond index was down -1.46%. International bonds provided a lift with the hedged Citi World Government Bond index up 1.50%. REITs were hurt by the prospect of rising interest rates and were down -6.66%. Finally, commodities were mixed with the Bloomberg Commodity index closing down slightly for the quarter.

A Tale of Two Styles: Growth and Value

Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Cap Value (Russell 1000 Value Index), Large Cap Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Cap Value (Russell 2000 Value Index), and Small Cap Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2018, all rights reserved. Read more


Are We There Yet?

As we celebrate the Women Impact Strategy’s second anniversary in April, it’s a bit thrilling to reflect on all that has happened in this relatively short period of time.

We began with the seed of an idea in 2015:

If it is true that gender diversity in corporate leadership roles (directors and executives) produces better results, is there a related  investment strategy that may be both financially rewarding and socially impactful?

Our own research, in addition to that of several others[1], concluded that the investment thesis was more than wishful thinking.  The research found better stock performance over long periods of time (ten years) for public companies with higher numbers of women at the top.   But looking in the rear view mirror has its limitations, and bringing an investment strategy to life in real time is …  something else entirely.

So how is it going? Exciting on all fronts, for sure.

  • Our experience continues to support the thesis.
  • Our strategy is now available as an separately managed account on the TD Ameritrade platform
  • Articles are published daily on the benefits of diversity, and the movement of investment dollars into socially impactful investments[2] continues to grow significantly
  • We are pleased to be among a very short list of independent firms across the country that have launched a gender lens investment strategy using liquid public stocks.
  • We presented at conferences and had our research published on the Impact of Women in Corporate Leadership
  • We are encouraged by the increasing numbers of women joining public boards, and the institutional investors who announced they are voting proxies[3] with an eye on the diversity of the board member candidates.
  • Perhaps most importantly, the benefits of gender diversity across areas such as decision making, innovation, and talent retention, are becoming widely recognized as providing a strategic advantage to companies.

Like a passenger in the back seat on a long car trip, we ask the question “Are we there yet?”.  No indeed! We see progress, but we are clearly not at a defined destination.  There is no magic number which allows anyone to check a box “Done”.

For the companies in which we invest, it’s about creating and sustaining a corporate culture which values the benefits of diversity.   And that, like investing, is best done with a long term view.

Suzanne Mestayer



[1] Credit Suisse Research Institute, “The CS Gender 3000: The Reward for Change”. September 2016, https://glg.it/assets/docs/csri-gender-3000.pdf

Hunt, V., Yee, L., Prince, S., and Dixon-Fyle, S., McKinsey & Company, “Delivering through diversity”. January 2018, https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

[2] “total US-domiciled assets unders management using SRI strategies grew to $8.72 trillion at the start of 2016”, US SIF Foudantion Biennial Reprt on: US Sustainable, Responsible and Impact Investing Trends, 2016.

[3] Vittorio, A., “New York State Pension Fund to Protest All-Male Boards”, March 21, 2018, https://www.bna.com/new-york-state-n57982090156/.

Fink, L., “Annual Letter to CEOs: A Sense of Purpose”, https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter