January 5, 2010

Bryan Diers

Managing Director and Private Client Advisor, US Trust, Bank of America Private Wealth Management
Dallas

Top tips We feel, and most tend to agree, that the recession is over and the financial markets are really in a transition period, from recession to recovery, and the recovery has begun to take place. It’s certainly not going to be a straight line, whether it’s slightly up or straight up: it’s going to be volatile. We see a rising growth in various parts of the economy, falling inflation at the present time and concern about inflation in the years to come.

But low interest rates will probably continue for an extended period of time as the corporates and individuals try to repair their balance sheet in order to raise the capital that they need to return to the growth modes we’ve seen in the past. Advice is tailored according to the client’s investment objectives and appetite for risk but, we feel, in the equity space, reflationary assets should benefit greatly as we start to see this recovery continue.

It’s an opportunistic time as we see the market pullback to continue to place more capital in the markets and allocate from fixed income to equities – we tend to feel, from a broad perspective, over allocation to equities versus fixed income is appropriate at this time, and focusing in the emerging markets as it relates to equities, growth equities over value, materials, industrials, energy.

We feel very strongly about the technology companies: a number of these industries are very well capitalised and very well positioned to grow. They are not as impacted by the credit crunch and the illiquidity that we’ve experienced in some of the other industries.

With regards to fixed income we prefer higher quality corporate bonds and munis rather than government, because the right research is provided to the client. There are very good companies, corporate bonds and municipal offerings that provide a little better yield and, given what the governments are paying, it’s probably not the place to be. We don’t feel you have to go for a risk free government and get little to no return but we don’t feel it’s time to chase yield and go out and look at these lesser quality fixed income instruments that might pay a higher yield.