From the Desk of Garrett D’Alessandro, CFA, CAIA, AIF®
Although 2018 returns were negative for equity investors and about flat for bond investors, City National Rochdale achieved positive results in several new strategic alternative asset classes through our purposeful expansion to our investment universe by focusing on new strategic opportunistic investing.
A Mountain Too High
Investing in 2018 was like climbing to the top of Mount Everest, reaching the apex, then losing our footing and tumbling all the way down. The S&P 500 achieved a record high in September, with investors having earned approximately 11.2%, then fell to a net loss of about 4.38% for the year.
What matters is whether the U.S. economy and equity markets will regain their footing and produce good returns this year. We believe they will—during 2019, the markets should generate positive equity returns again. First we have to collect our senses, brush off the uncertainty, and regain our confidence. To do this, we need to get clarity on a few key issues, including: tariffs, interest rate concerns, and slowing growth in corporate earnings. Nonetheless, we are hopeful that the economy will remain solid enough for U.S. equities to generate returns of 6% to 8% in 2019. For fixed income investors, current yields are more appealing than a year ago—which we expect will remain modestly attractive.
Although 2018 returns were negative for equity investors and about flat for bond investors, City National Rochdale achieved positive results in several new strategic alternative asset classes through our purposeful expansion to our investment universe by focusing on new strategic opportunistic investing. Over the next two to three years, we seek to generate better returns and diversification by considering adding the addition of new opportunistic investment strategies to client portfolios.
We use a three-dimensional framework when structuring how we generate potentially superior returns.
City National Rochdale’s investment outlook over the next two to three years indicates a likelihood of generating lower than average returns from traditional asset strategies. This is why our research team is dedicating more effort toward identifying and offering higher-returning opportunities to our clients.
Our goal is to create more wealth for our clients than what is achievable by only investing in traditional investment choices.
While we expect individual stocks and bonds to remain a core representation for client portfolios, we believe the outermost circle—New Strategic Investment Opportunities—will offer clients unique return and diversification choices to meet their investment objects. City National Rochdale’s extensive research enables us to find promising investment opportunities that can add sustainable strategic value to client portfolios. These are higher returning investments that are difficult to discover, have limited access, and require extensive intellectual research efforts.
After an unusual year in which bonds and U.S. core stocks were flat to negative, City National Rochdale clients can be reassured that our unique and differentiated research has been successful over many such cycles by focusing on quality companies and now adding New Strategic Investment Opportunities. The goal is simply to find investment returns wherever present.