Zevin Asset Management Q2 2014 Investment Results

Jay OwenSRI/ESG News

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Zevin Asset Management Q2 2014 Investment Results  

Please click here to see Zevin Asset Management’s Q2 2014 results and corresponding charts. Attribution analysis, factbooks as well as the performance of our taxable composites are available upon request.

 

During the quarter, our Global Appreciation non-taxable composite increased by 2.01%, net of fees, while our Global Appreciation with Income composite increased by 2.12%, net of fees. This compares to an increase in the MSCI All Country World Index (ACWI) of 5.23% and an increase in the 60/40 blended benchmark of the MSCI ACWI/Barclays Government/Credit bond Index of 3.90%.   

 

  * Please see disclosures below

** The Balanced Benchmark is comprised of 60% MSCI ACWI Index and 40% Barclays Aggregate Govt/Credit Index

 

In the second quarter of 2014, returns for our portfolios lagged the global stock market, due in part to a high percentage held in cash and bonds. Cash and bonds were held partially as a hedge against global risks we see potentially unfolding over the next year, and partially because we have had a hard time finding equities we would like to own at attractive valuations. Underperformance was also due to low exposure to utilities and energy stocks, the two best performing sectors for the quarter. During the quarter we reduced our holdings in U.S. information technology stocks and European consumer discretionary stocks as both of these sectors looked unattractive in our model. We increased exposure to sectors that we forecast to have above market returns over the next twelve months: North American telecommunications, U.S. consumer discretionary, European healthcare and European financials.  

 

Looking ahead we expect moderate returns for stocks over the next twelve months in our most likely scenario of 2% to 3% GDP growth in the U.S. and improving economies in other parts of the world. Within the U.S., we expect the Federal Reserve to begin raising rates in the first half of 2015 resulting in higher yields and lower prices on government bonds. We continue to monitor disappointing recent economic data out of Europe and its potential to de-stabilize the Eurozone, and the faltering property market in China and the wider implications that may have on Chinese economic growth. Also of concern are the increases in sectarian and political conflict around the world and the potential for these conflicts to involve larger countries and/or interrupt oil flows driving energy prices significantly higher. These risks, along with valuation concerns given the advances in stocks well in excess of growth in company profits, keep us wary of adding equity exposure and comfortable for now with our high cash position in most accounts.

 

We will be holding a conference call to discuss performance, our thoughts on the market, and to take any questions you may have on Thursday, July 17 at 1pm EST. The call-in number is (605) 562-3000 and the access code is 528333#.    

  

As always, please do not hesitate to contact us with any questions or comments.

 

Kind Regards,

 

Sonia Kowal 

Director of Socially Responsible Investing 

Zevin Asset Management, LLC

zevin.com 

Zevin Asset Management, LLC Disclosures

1.  Past performance is not a guarantee of future results.  Investments in common stocks and in fixed income securities are always subject to the possibility of meaningful losses.

2.  Performance results for the most recent quarter are preliminary until six weeks after the quarter has ended.

3.  Performance shown for all composites and all comparison indices includes dividend and interest payments reinvested.

4.  All composite performance calculations are shown net of our fees, transaction costs and all of any wrap or bundled fees that include transaction costs.  Since inception the fees paid on all accounts in these composites have ranged between ½% and 1% per annum of the value of assets under management, with the exception of a small number of small accounts that have sometimes been charged no fee for a limited period of time or pending increases to a specified minimum value.  Comparison index performance is always calculated as if there were no fees and no transaction costs.

5.  All composite results are weighted by the market values of the included portfolios.  Results computed as equal weighted averages of all the included portfolios are available on request as well as the range of outcomes compared to these two averages.

6.  Composite performance for periods longer than one calendar quarter is the compound average of the quarterly results included in the period.  Summary results for periods longer than one year are the annual average equivalent return of the compounded total return.

7.  Each composite contains all customized discretionary portfolios that were over $100,000 at the beginning of a calendar quarter, that were managed by us for the entire quarter and that satisfied the following inclusion criteria for the entire quarter:  Global Appreciation: Non-taxable portfolios that have been compared to an all common stock benchmark; Global Appreciation with Income: Non-taxable portfolios that have been compared to a balanced benchmark consisting of a combination of at least one equity index and one bond index.

8.  Benchmark Indices:  Most of our Global Appreciation portfolios have been compared to either the S&P 500, the Russell 1000 Growth Index and the Russell 3000 Growth Index. We believe the MSCI ACWI Index is a more accurate portrayal of the universe from which we select our stocks. Most Global Appreciation with Income portfolios have been compared to the S&P 500, the Russell 1000 Growth Index, the Russell 3000 Growth Index, or the MSCI ACWI Index as well as the Barclays Aggregate Government/Credit Index. When conditions warrant we may purchase stocks that are not included in or representative of our benchmarks. In addition we sometimes deliberately hold cash or bonds in Global Appreciation portfolios. For these reasons, returns in our Global Appreciation accounts are less highly correlated with their equity benchmarks than is the case for many other professional investors. We advise our clients that we think the benchmark is most useful for understanding short-term fluctuations in results but not necessarily for judging results over many years.

 


 

 

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