Business Update:

Taxes: For our family office clients we are targeting completion of tax preparation by this Friday, April 8th.

SEC Required Disclosure: We are annually required to inform all of our clients when our SEC required disclosure forms ADV 2A and ADV 2B are updated and filed with the SEC.  These forms were filed and accepted by the SEC and you can review them by following the links below:

Privacy Policy Disclosure: We are also required to disclose annually our privacy policy. As a summary, we do not disclose any of our client’s personal information unless you direct us to.  To review our official privacy policy, please use the link below:
Privacy Policy Disclosure

We think Fidelity will be changing money market funds:  Fidelity has delayed this action the last two months but we think it will occur in April or May. To comply with SEC rule changes for money market funds, all clients owning the Fidelity Municipal Money Market Fund (FTEXX), as their cash sweep vehicle, will automatically be transferred to the Fidelity Taxable Money Market Fund (FDRXX) in the near future. The primary reason for the change is preserve the $1 net asset value for funds being deposited or withdrawn from the portfolio.

Market Insight:

The month of March was favorable to risk assets (stocks & high yield bonds).  The main drivers were the price of oil finally stabilizing, China’s growth problems staying out of the news, and accommodative guidance by the Federal Reserve.

We continue to see the price movement of risk assets being driven by speculation, and central bank action (or inaction), rather than true economic fundamentals (which remain stable in the U.S.).  This speculation hurt risk assets during  the first six weeks of the first quarter and benefited risk assets during the last 6 weeks of the first quarter. As measured by the S&P 500 index, stocks were up about 1% and bonds as measured by the Aggregate Index were up 2% at the end of the first quarter of 2016 .

Investment Strategy:

Over the last few years, there has been pressure on mutual funds and exchange traded funds to reduce fund expenses.  This is good news for users of these products, and for many of the products we use in your portfolios, we have seen a reduction in expense ratios. All else the same, this ultimately translates into increased expected returns.

We will begin the formal quarterly review of the funds on our preferred funds list starting April 18th.  Our focus is to identify the most appropriate products for each asset class in our asset allocation models and to replace products do not meet the risk/reward characteristics for their respective asset classes. Expense ratios are one of risk/reward characteristics that we use to evaluate the appropriateness of a particular product.

We would also like to take this opportunity to remind everyone that if you invest in the financial markets you need to have a long term perspective. This was especially apparent during the first quarter of 2016 where the U.S. stock market declined by 10% during the first 6 weeks and rallied by 12% during the last 6 six weeks. After that roller coaster ride the U.S. stock market was essentially even for the first quarter, .  As the “Oracle of Omaha”, Warren Buffet said, “The stock market is designed to transfer money from the active to the patient”.

We will continue to remain patient and stay the course.  We do expect this volatile environment to continue. We will be reviewing all our clients risk profiles during May to make sure they are up to date. Please call Don or Adam if you would like us to send you a new risk profile questionnaire, or need assistance filling one out.  This will help ensure that you are in a portfolio that reflects your risk tolerance for the expected market volatility going forward.

Final Thoughts:

Thank you for letting us serve your financial planning and investment management needs.  We are always honored if you refer your friends or relatives who could benefit from our services.