The $26 Billion Woman Posted in: Featured, People - Read the Washington Business Journal profile on Amy Raskin, Chief Investment Officer, at Chevy Chase Trust.

Amy was also recently featured on CNBC. View below:
Don’t just take our word for it. Posted in: Featured - At Chevy Chase Trust, we specialize in global research and thematic investing informed by careful planning, and it's working. Forbes and RIA Channel recently ranked us among the highest in their Top 100 list, for 2 years running. Important Disclosures
Thematic Investing Performs Posted in: Uncategorized - Thematic investing at Chevy Chase Trust is a progressive departure from common Wall Street practice. It examines how the world is changing, determines which companies will be advantaged and invests accordingly.
Important Disclosures
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  • First Quarter, 2020 Posted in: Insights, Investment Update, Latest News, Noteworthy - We are in the midst of a healthcare crisis and a financial crisis. The combination of a rapidly spreading novel coronavirus and dramatic swings in global financial markets creates unprecedented challenges.Important Disclosures

    We’re Here — We are in the midst of a healthcare crisis and a financial crisis. The combination of a rapidly spreading novel coronavirus and dramatic swings in global financial markets creates unprecedented challenges. These challenges will continue for some time. They affect our employees and their families, our clients and their families and our communities. We are committed to helping in every way we can.

    In the past few weeks, we have successfully transitioned to a fully functioning new work environment. We have created a daily firm-wide internal communication to inform employees about rapidly changing economic and market activity as it relates to our clients, their portfolios and our thinking. We believe that providing our investment, trust, planning and relationship teams with real-time information that they can then use to inform their thinking and share with clients is critically important at this time. They are reaching out to you and you should not hesitate to reach out to them.


    A First Quarter of Firsts

    The S&P 500 ended 2019 at 3,231. In the first six weeks of 2020, the index rose 5%, reaching an all-time closing high of 3,386 on February 19th. At the peak, it appeared economic data was strong, unemployment was at multi-decade lows and consumer confidence was high. By March 12, only 16 trading sessions later, we were in a bear market and, likely, a recession. By March 23, the Index had fallen 34% from the peak. The market recovered some, but the S&P 500 still ended the quarter down 20% from the start of the year and the Dow had its worst first quarter in its 135-year history.

    Whole sections of the economy have closed in a way that hasn’t happened since WWII. The next few quarters could result in some of the worst GDP numbers since the Great Depression. On the supply side, production has been impaired by workers’ inability to get to their jobs. The Bureau of Labor Statistics estimates that less than 30% of U.S. employees can work from home. On the demand side, workers have less to spend and almost nowhere to spend it.

    Economies and markets, like individuals, have a hard time dealing with uncertainty, especially when the stakes are this high. The speed and magnitude with which policymakers have responded in recent weeks is unprecedented. This will not necessarily reduce the short term pain felt by large swaths of the economy, but it has provided important ballast to financial markets. The Federal Reserve and other central banks have rewritten existing rule books by expanding balance sheets by trillions of dollars, providing unlimited liquidity to the banking sector and setting up programs to backstop stressed parts of financial markets, all with heretofore unseen speed and scale.


    Economic Indicators

    This recession, unlike prior recessions, was caused by deliberate policy decisions aimed at restricting the spread of disease, rather than a gradual build-up of financial imbalances. As a result, it should not be surprising that economic data, instead of declining gradually, is falling off a cliff. On March 26, weekly unemployment claims showed an off-the-chart increase of 3.28 million newly unemployed workers, an all-time record that far eclipsed the previous high of 659,000 in 1982. And the true increase in unemployment is certainly understated because many state websites lacked the bandwidth to handle the volume of applications. In addition, under then existing rules, the self-employed and those working in the gig economy did not qualify for unemployment benefits (this was rectified in the CARES Act). Approximately 32 million people, or almost 20% of the U.S. workforce, are employed in retail, hospitality and air transportation. Second order impacts, from dentists to hair dressers to dry cleaners, could affect almost half as many more. The St. Louis Fed estimates that Q2 unemployment could be as high as 30% with a GDP decline of approximately 50%.

    The abrupt halt in economic activity is global. Open Table is the primary restaurant reservation system in many countries. Open Table tracks the number of seated diners in some 60,000 restaurants that use its reservation system. The following table shows that in a span of less than two weeks, global restaurant dining went from business as usual to a virtual standstill. 

    Who are the few foolhardy souls who think they still need a reservation to get a table at an empty restaurant?


    A Liquidity Crisis

    It wasn’t just the dramatic decline in economic activity that rattled markets. A scramble for cash and volatility across asset classes led to a breakdown in market functioning, even in large liquid markets like U.S. Treasuries. Investors sold what they could, if they could. The day record-breaking unemployment claims were released, the S&P 500 climbed 10% in response to tentative signs that liquidity was returning to some fixed income markets.

    Although the situation has moderately improved, the global economy is still facing a cash shortage. Companies are tapping credit lines at a time when banks would normally be looking to increase their own cash reserves. The demand for cash has caused LIBOR, repo and commercial paper spreads to surge. And it’s not just any cash. As the world’s reserve currency, the U.S. dollar is in increasingly short supply driven by global demand.

    U.S. consumers were in relatively good shape coming into this crisis, but many corporations were not. Prior to the downturn, half of the $7 trillion investment-grade corporate debt in the U.S. was BBB rated, only one notch above a “junk” or “highyield” rating. Many prominent issuers have been downgraded due to reductions in revenue and cash flow projections. More downgrades will come. This will add significant supply to the high-yield market just as demand is drying up.

    It is crucial that this temporary liquidity crisis does not become a solvency crisis with rising bankruptcies and even higher unemployment. The secondary damage would be more difficult to heal than damage from a temporary fall in spending. Central bankers led by the U.S. Federal Reserve Bank seem set on preventing a systemic financial problem. If a program doesn’t have the intended effect, they seem willing to tweak it or increase the size. In a world of fiat money, we believe central banks will be able to prevent wide-spread funding-related problems, but it’s a risk. We don’t expect spreads to revert to pre-crisis levels in the short- or even medium-term.


    Volatility in Perspective

    Volatility is high in all asset classes. The speed at which markets are moving is only seen during historic events. Based on the following chart, current volatility dwarfs volatility in all prior crises going back to the Great Depression.

    Bear markets are usually volatile and bottoming is usually a process. The following accounts for every single trading day during the Great Financial Crisis.

    We expect volatility to continue at least until fixed income markets are fully functioning at more normal levels and we can better estimate the duration of the economic shutdown. Equity markets will likely need some certainty that large economies have the spread of COVID-19 under control before risk assets can mount a sustained rally from current levels. 


    Assessing the Timeline

    This recession is different from other recessions in that shutting down the economy is a deliberate policy choice, a necessary step to slow the spread of the coronavirus, not the result of financial imbalances. Provided that the number of new infections around the world stabilizes during the next two months, growth should begin to recover in the third quarter. China is a useful template to assess the likely path forward. China seems to have COVID-19 under control, with most provinces not reporting new cases for several weeks. But as data come in, it is clear that China is seeing a 40-45% contraction in services activity from pre-crisis levels and a 30-35% fall in manufacturing activity. Activity is normalizing, but slowly.

    In the U.S. the economic damage from the economic shutdown is potentially so large that it cannot be sustained for more than a few months without some irreversible economic damage. So the issue is: what will be the criteria for shifting from more extreme to less extreme controls? We believe the general roadmap is probably very tight controls for a few months, followed by fewer but still pervasive controls for up to a year.

    Author Tomas Pueyo created a framework for evaluating these options. There are four categories of measures presented in descending order of how extreme and essential they are to keeping the spread of the virus low. The measures in Category 1 will almost certainly need to stay in place for a considerable period of time. The measures in Category 4 should be eliminated first. The measures in Categories 2 and 3 represent areas where regional jurisdictions will make different decisions.

    Category 1: High Impact Measures with Low Cost:

    • Testing
    • Contract tracing
    • Hand washing/public hygiene

    Category 2: High Impact Measures with Substantial But Moderate Cost:

    • Restrictions on gatherings above a certain size
    • Travel restrictions

    Category 3: Low/Medium Impact Measures with High Costs:

    • Closing conferences
    • Closing sports
    • Closing clubs

    Category 4: High Impact Measures with Unsustainable Costs:

    • Closure of schools and universities
    • Closure of bars and restaurants
    • Closure of most non-essential services and businesses
    • Stay at home orders


    Portfolio Management

    Our investment themes haven’t changed. Three themes which have been some of our mainstays will be even more relevant as various aspects of a post-pandemic environment take hold. Within molecular medicine, it is likely that there is some genomic basis to explain why certain people have extremely adverse reactions to COVID-19 and others are largely asymptomatic. Age and preexisting conditions are factors but do not appear to be the only factors. We expect the pandemic will lead to an acceleration in genomic research as it pertains to COVID-19 and viruses more broadly. Our investments in companies focused on genomic related testing, logistics and therapy development should see higher growth rates. Further, some of the political pressure on the healthcare sector should be alleviated as these companies step up to the urgent needs. Similarly, our investments related to heterogeneous computing and technology should benefit from their role in facilitating remote working models even after work from home is no longer mandated. Finally, our automation related investments should benefit as companies are forced to rethink some of the more manual steps in their production processes and adapt workflows to better manage inventory throughout supply chains.

    We are not market timers. We do not believe that market timing is an investment skill that can be successfully executed with precision or repeatability. Over the last 20 years, which represents over 5,000 trading days, if an investor missed the ten best days in the market, an investment in the S&P 500 would have forfeited 60% of the total return for the entire period.

    Prior to the end-of-month market rally, the S&P 500 dropped 34% over 23 days. Typically, the transition from a bull market to a bear market takes about ten months. This time, it took 16 trading days. Whether the market bottom is behind us or in the near future, we believe current market levels represent relatively good entry points that will reward investors with adequate liquidity and a long-term investment horizon. Investors who bought equities between the fall of 2008 and spring of 2009 saw investments double in less than five years.

    For most clients with balanced portfolios, we will use liquidity to opportunistically rebalance equity percentages at least to allocation levels prior to the precipitous decline. For many clients, we will also initiate planning and risk tolerance conversations to consider increasing overall equity allocations at opportune times over the next quarter. Finally, for clients with other outside liquid asset classes, we think shifting to equities is worth consideration.

    Fixed income allocations will be viewed as a source of funds if and when bonds trade at fair value. In normal times, we view fixed income as ballast against volatility and downside risk, a source of liquidity and a yield vehicle to fund recurring spending needs. In the current environment, all three have been impaired. Unlike bond mutual funds and ETFs, our clients own individual high quality bonds that can be held until maturity, so principal is not impaired and unrealized losses are not realized. We think fixed income’s role as ballast against volatility and downside risk, and as a source of liquidity, will return to normal. However, we do not think yields will be particularly attractive for the foreseeable future and we favor equities over bonds for their return potential.

  • Chevy Chase Trust Ranks: Barron’s Top 50 RIA Firms 2019 Posted in: Featured, Insights, Latest News, Noteworthy - At Chevy Chase Trust, we specialize in global research and thematic investing informed by careful planning, and it's working. Barron's Top Financial Advisors recently ranked us among the highest in their Top 50 list.

    Chevy Chase Trust is proud to announce its top ranking in Barron’s. 

    View Barron’s rankings here.

    Important Disclosures

  • Q & A with Bobby Eubank Posted in: Noteworthy, People - We recently sat down with Bobby Eubank, Equity Research Analyst at Chevy Chase Trust, to learn more about his background.

    Bobby Eubank, Equity Research Analyst

    We recently sat down with Bobby Eubank, Equity Research Analyst at Chevy Chase Trust, to learn more about his background.

    In your words, what is it that you do for Chevy Chase Trust?

    I research themes for Chevy Chase Trust, and apply those themes to individual security selection. This involves researching long-term secular changes in the economy that will profitably accrue to companies that we can invest in as well as identifying companies that we should avoid. My current theme is Next-Generation Automation, or the set of technologies that will allow new industries to adopt automation and improve their production and distribution.

    Give us a brief rundown of a typical day here at Chevy Chase Trust for you.

    Lots and lots of reading! Thankfully that’s something I really enjoy. We have access to a lot of information– company reports, typical Wall Street research, financial press, but also trade journals and press, anything from Modern Materials Handling to TechCrunch. Beyond reading, I attend trade shows and visit companies to meet with management and engineering teams to keep abreast of business models and the technology. There is a lot of variety in my sources. I am constantly looking at what is happening in the world, and determining whether it confirms or challenges what we are thinking. I then take a deeper dive to find out what’s going on in existing or potential new themes and investments.

    Tell us a little about your background.

    I attended Towson University where I earned my bachelor’s degree in finance with a minor in economics. Early on, I joined the Towson University Investment group and became the Portfolio Manager of that group in my junior year. The group managed $100,000 of Foundation money for the University. We were relatively unique among our peers at other universities as our group and portfolio was entirely managed by students. I’m very proud of the group and its success in building experience in the investment industry and I do my best to continue to support the group. Additionally I interned at Blue Point Investment Management and Heritage Financial Consultants.


    Where was your first job after college?

    My first job out of college was here… I’m a lifer at CCT!

    What do you enjoy most about your career?

    I get to learn about an enormous variety of exciting topics. I’m always being exposed to something new, things that challenge my thinking. Meeting management teams, touring factories, and visiting trade shows are really fun ways to see how the products we use in our day to day life are produced, especially when they result in a lightbulb moment with an investment idea.

    What do you enjoy most about working here?

    I really love what I do. I joke to all my friends and family how lucky I am to have this job because I get paid to do what I would do even if I wasn’t here in the office.

    What would you advise someone considering a career path like the one you’ve taken?

    I think it’s wise to focus on creativity or seeing things in a novel way. I’m very interested in automation and artificial intelligence and I think that will impact most industries. What I think allows us to be different, or beat the machines if you will, is creativity. We will lose if our job is solely crunching numbers faster; machines will be able to do that. But we can pull in a variety of information, analyze it, let it distill in our brain for a couple months, and think about it in such a unique way; that’s the difference between us and the computers. I focus on thinking big picture, being creative, and being curious about the world.


    What is the best lesson you’ve learned throughout your career?

    To be honest with yourself, and be willing to change your viewpoints. Which isn’t easy. The world is more complex than we comprehend. You have to be willing to change what you thought you knew. Often times this isn’t a complete change of mind but rather refining or deepening of your understanding based on fluid information.

  • Food for Thought: 3 Common Mistakes Investors Make Posted in: Noteworthy, Video - Want to avoid common mistakes that many investors make?


    Want to avoid common mistakes that many investors make?

  • Fourth Quarter, 2019 Posted in: Insights, Investment Update, Latest News, Noteworthy - 2019 was a good year for almost all asset classes. The S&P 500 total return of 31.5% was the second best in the last 20 years.
    Important Disclosures

    A Good Year — 2019 was a good year for almost all asset classes. The S&P 500 total return of 31.5% was the second best in the last 20 years. U.S. bonds performed well, with 10-year Treasuries returning 8.8% for the year. Non-U.S. equities, gold and oil, all had positive returns.

    But stepping back, the S&P return looks less impressive and the outlook less than inspiring. The 2019 rise followed a sharp 2018 drop from a peak in January 2018. The S&P 500 has averaged a more modest 8.4% annual return over the nearly two years. Calendar returns are noteworthy but other periods, some longer and some shorter, can be more meaningful.


    Financial Conditions: “As Good As It Gets”

    U.S. equity returns were poor in 2018 when the market was digesting four Federal Reserve rate hikes and expecting two or three more in 2019. The yield curve flattened as short-term rates rose and credit spreads widened on fears of a recession. Consumer net worth declined 13% as asset values fell. Global manufacturing slowed.

    What changed in 2019? Central banks massively increased liquidity. The Fed pivoted from tightening to easing, cutting the Fed Funds rate three times, and returning to balance-sheet expansion in October. The European Central Bank resumed open- ended quantitative easing in November. Because Japan’s central bank never stopped quantitative easing, the three largest central banks in the developed world were printing money in unison, the first time since 2010.

    With 85% of central banks easing at year-end, the highest level since 2010, and up from just 35% in early 2019, global short rates fell to near record lows, foreign exchange reserves grew, and money aggregates grew faster than credit across major advanced economies. Conditions have rarely been this easy, particularly in the absence of a recession.

    Easy financial conditions are generally bullish for equity markets. But, as the display below shows, it will be hard for financial conditions to get much better from here.

    Financial Conditions Have Only Been Better Than Today’s Levels Twice:

    2000 Tech Bubble and 2017 U.S. Corporate Tax Cuts

    Markets tend to do well when financial conditions are easing for three related reasons. First, investors expect falling interest rates to stimulate spending and investing, fueling economic and earnings growth. Second, lower rates reduce the discount rate applied to future earnings, increasing their present value. Third, falling rates make bonds and cash less attractive alternatives to stocks.

    In the past year, the Fed and other central bank policies drove the S&P 500 price/earnings multiple from 15.5x to 20x. With component earnings only 1% above their 2018 level, more than 95% of the Index price gain in 2019 was from P/E expansion, not earnings growth.

    Short rates have little room to fall from current low levels. Level matters, but change matters more. With interest rates near historic lows and liquidity near historic highs, there’s also little room for further P/E expansion. The Fed’s commitment to maintaining easy financial conditions should support stocks and risk assets generally, but multiples are unlikely to rise significantly.


    Recession Spotting and Timing Turns

    Economists and investment strategists have a dismal record predicting recessions and market turns. Many who claim to have predicted the 2008 global financial crisis were either bearish long before the collapse or remained bearish long after the recession ended. The difficulty in anticipating recessions stems from two factors. First, economic data is only known after the fact and is not predictive. Second, precipitous market declines generally coincide with falling outputs, leaving little time to exit risk assets.

    Making predictions is easy. Making accurate predictions is hard. Acting on predictions can be costly. Keynes famously quipped, “Markets can stay irrational longer than you can stay solvent.” Below are some noteworthy investor warnings that proved too early or wrong.


    “There are some parts of the global economy that are now at the risk of a double-dip recession. From here I see things getting worse.” Nouriel Roubini; May 20, 2010

    “Another recession is coming, and soon… [I am] 99% sure we will have another recession by the end of next year.” David Rosenberg; June 4, 2011

    “I think we could have a global recession in Q4 or early 2013. That’s a distinct possibility.” Marc Faber; May 25, 2012

    “I see real tremendous problems ahead and I don’t think we are handling it right and nobody really wants to talk [it] out… We are headed toward strong correction and possibly a complete meltdown but not systematic like 2008. It won’t threaten the system, it’s just going to threaten your livelihood and net worth… I do think you are in a very massive bubble and when it bursts it isn’t going to be pretty, it could be a bloodbath.” Carl Icahn; September 29, 2015

    “Global markets are facing a crisis and investors need to be very cautious… China has a major adjustment problem. I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.” George Soros; January 7, 2016


    Investors who sold equities based on these warnings would have missed much of a great bull market. The display below shows the opportunity cost for a dollar shifted from equities to a diversified bond portfolio after each warning. For example, after Rosenberg’s mega-bearish commentary in June 2011, bonds underperformed the S&P 500 by almost 60%.

    The Consequences of Listening to the Armageddonists

    Trouble Spotting

    If there are trouble spots or even bubbles that could precede a downturn, where could they be? Three possibilities are FAANG stocks, private equity, and the U.S. relative to the rest of the world.

    • FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) have dominated market returns for the past decade. As we showed in last quarter’s commentary, no group of market leaders has dominated for two consecutive decades (though a few individual stocks have). And for each of the past five decades, underweighting the prior decade’s leaders added alpha over the subsequent decade. While it is too early to say FAANG stocks have peaked, we do not believe the group will lead the coming decade.
    • Private equity was one of the best performing asset classes over the past 20 years. As a result, many investors, particularly institutional investors, have significantly increased allocations to this asset class. Private equity assets soared from $500 billion in 2000 to almost $6 trillion in 2018, while the number of listed stocks on U.S. exchanges plunged from about 8,500 to 5,500. One result is that public equities have lost their comparative liquidity premium. Today, private equity valuations are significantly higher than public equity valuations in many sectors.

    Money has also poured into venture capital. WeWork is an example of how such investments can go wrong when investors become too bullish. Public funds invested alongside private capital in WeWork’s last rounds of financing, ahead of its anticipated initial public offering and before WeWork’s valuation collapse.

    WeWork Valuation

    • Finally, U.S. equities have outperformed non-U.S. equities by an unprecedented margin since 2008. About half of the gap is due to higher growth in sales per share in the U.S.; another third, to more growth in U.S. profit margins; the balance due to greater U.S. P/E expansion. As a result, equity markets now appear more reasonably priced outside the U.S. than inside.

    The Divergence Between US & Ex-US Equities

    We think non-U.S. markets may soon be performance leaders. The MSCI World Index, excluding the U.S., has been essentially flat since 2006. Reaccelerating global growth, a weaker U.S. dollar, favorable valuations and generally improving corporate governance should provide support for many foreign markets in 2020 and beyond.


    Portfolio Positioning

    Our current view is neutral to slightly defensive. In our view, the U.S. stock market was expensive at its January 2018 peak and it is expensive now. While stock markets could continue to rise in the near-term, primarily from global stimulus and low recession odds, long-term returns are likely to be low. A downturn will inevitably come, even if it doesn’t come soon.

    The adage that valuations are usually useless as a short-term timing tool has truth. Valuations by themselves offer little guidance on where the stock market is going in the short run. But if there’s a catalyst for change, valuations can have a big impact on subsequent returns. When stocks are inexpensive, unexpected good news can cause prices to surge. When stocks are expensive, as now, unexpected bad news can be the catalyst for sharp declines.

    Heading into 2020, we expect to increase allocation to non-U.S. stocks and decrease allocation to U.S. stocks. We are favorably inclined toward Europe. Net profit margins among companies in the STOXX Europe 600 Index are about three percentage points below S&P 500 margins. This gives many European companies opportunities to grow earnings.

    We will continue to trim FAANG stocks and FAANG-related holdings, which populate our Heterogeneous Computing, Cultural Convergence and Wealth Concentration themes. We are finding attractive opportunities in Molecular Medicine in both the U.S. and Europe. We believe the broader healthcare sector is well-positioned to outperform in 2020, after underperforming in 2019. We are also researching new opportunities in our Automation theme in the U.S., Europe and Japan.


    Thematic Investing

    More and more investment firms are using “thematic” to describe their investment approach. In many ways it is becoming a buzzword with little definition and few commonalities. Most common are single theme exchange-traded funds; there are now more than 120 U.S. listed funds and the number is growing. Almost equally common are actively managed products that refer to favored industries or geographies as investment themes.

    Here is our foundational definition:

    Thematic investing seeks investable ideas that stem from economic or technological changes powerful enough to influence corporate performance across multiple industries.

    To amplify this definition, we expand on three key terms.

    • “investable ideas” – We seek themes that are investable, which includes two traits. First, there must be enough public companies that are beneficiaries of the theme, with sufficient liquidity for us to invest at least 5% of our portfolios in the theme. Water as a scarce resource, nanotechnology and space travel may be fascinating trends that could have major impacts on the world, but they are not investment themes because we haven’t found sufficient or appropriate investment candidates. Second, we must believe that other investors will begin to discount the change or disruption in their valuation models within a reasonable time frame, which for us is three to five years. We don’t have to expect the change or disruption to mature within that time frame, just that other investors begin to expect it.
    • “corporate performance” – Our approach focuses on changes most likely to have a profound influence on corporate performance, seeking companies that will be beneficiaries of thematic tailwinds and avoiding companies that will be casualties of creative disruption. We think some thematic investors fail to distinguish between a trend and a potentially profitable investment theme. There are many significant changes occurring across the globe.But, most of these changes are simply trends and not investment themes because they are not likely to create economic advantages that will result in sustainable profits.
    • “multiple industries” – Today, most Wall Street research on both the sell-side and buy-side is organized by industry, with each analyst tasked with being an expert in his or her niche. The result? Few researchers look at the big picture – or even know how to. This creates an inefficiency. We organize research analysts by theme, not industry. Each analyst is tasked with thinking about his or her themes holistically and uncovering relevant investment opportunities regardless of industry or geography.

    This framework for thematic investing is then executed using a four-step process.

    1) Identifying Long-term Secular Themes – The research team focuses on disruptive changes that span multiple industries. Special attention is paid to new technologies or business models, industry leaders, disruptors and high barriers to entry. The evolution of a theme is as important as the development of a new theme.

    2) Individual Company Research – The thematic research process identifies companies that are participating directly or indirectly in thematic change. We seek companies positioned to capitalize on the change or disruption over a multiyear timeframe. Fundamental company research considers thematic exposure, financials, management and valuation.

    3) Macroeconomic Overlay – The investment team constructs a macro view of the global economy including tax, trade, fiscal, monetary and governmental policies. While our themes unfold over the longer-term, cyclical factors can have shorter-term but important impacts on market weightings.

    4) Portfolio Construction and Risk Management – Thematic portfolios consist of 40 to 50 stocks across five to seven themes. Individual holdings and the overall portfolio are continuously analyzed for portfolio characteristics, including beta, price/earnings multiples, factor exposures, and company, sector and geographic concentrations and diversification.

    We adhere to our structured thematic investment process. It’s the constant we carry into 2020.


    Fixed Income

    Bond yields have been particularly volatile the last few years. The 10-year Treasury yield rose to 3.24% in November 2018 and then fell to a low of 1.46% in September of 2019, for a 55% decline in just ten months. The yield subsequently rebounded to end the year at 1.92%, still well below its 2.9% average for 2018.

    While central bank easing is succeeding in stimulating economic growth, it is also prompting a borrowing boom. Total global debt topped $250 trillion in 2019, as debt in the U.S. and China ballooned to levels never seen before. Global debt is now three times as large as global GDP and about three times the value of world equity markets.

    We find the U.S. government’s trillion-dollar deficit in the eleventh year of an expansion worrisome. We’re also concerned the U.S. business sector, forced to deleverage after the credit crisis, is again taking on high debt loads. Recent corporate bond issues have generally been covenant light, suggesting that corporate borrowers, not lenders, are getting the better deals.

    With yields low, we fear that many investors are chasing incremental yield. We think it likely that capital is being misallocated and money will be lost. We expect bond yields to be range-bound to modestly higher in the short to medium term. In this setting, our portfolios continue to be dominated by relatively short duration, high-quality debt instruments.

  • Ashley G. Hall featured in Washington Business Journal’s People on the Move Posted in: Noteworthy, People - Ashley Hall has Joined Chevy Chase Trust as Vice President, Wealth Advisor/Relationship Manager. She advises clients in the areas of investment management, financial and estate planning, and trust administration. 

    Ashley Hall has Joined Chevy Chase Trust as Vice President, Wealth Advisor/Relationship Manager. She advises clients in the areas of investment management, financial and estate planning, and trust administration. 

    Read the full article here.

    Important Disclosures

  • Amy Raskin featured on CNBC’s Fast Money Halftime Report – September 20, 2019 Posted in: Noteworthy, Video - Amy Raskin, Chief Investment Officer, appeared on CNBC's Fast Money Halftime Report on September 20, 2019, to discuss current market conditions and what they mean for investors.

    Amy Raskin, Chief Investment Officer, appeared on CNBC’s Fast Money Halftime Report on September 20, 2019, to discuss current market conditions and what they mean for investors.

  • Chevy Chase Trust | Account Information Posted in: Noteworthy - Details regarding the timing and availability of your Chevy Chase Trust account tax forms.

    2019 Tax Documents

    To allow you to plan for the preparation of your 2019 tax returns, we are providing a time table for the mailing of the official tax documents that Chevy Chase Trust is required to report to our clients and the Internal Revenue Service. Please note you will only receive the tax forms that are applicable to your account(s). Copies of your tax documents will also be available on Wealth Access.



    Consult with your tax advisor to discuss the possibility of filing an extension with the IRS to obtain additional time to file your tax forms, particularly if you hold securities subject to income reallocation.


    DOWNLOAD TAX DOCUMENTS TO TURBOTAX: Chevy Chase Trust is proud to announce it is a TurboTax Import Partner. This means that you can import your Chevy Chase Trust 1099 forms directly into your tax return when you use TurboTax software. A TurboTax tracking code can be found on the front page of your tax statement. During the preparation of your return on the TurboTax software, you will select Chevy Chase Trust forms for import and will be prompted to enter your TurboTax tracking code and social security number.

  • Food for Thought: Maximizing Your Charitable Donations Posted in: Latest News, Noteworthy, Video - Chevy Chase Trust shares ideas about how to maximize your giving strategy.


    Chevy Chase Trust shares ideas about how to maximize your giving strategy.

  • Chevy Chase Trust supports Greater Washington Community Foundation Posted in: Community, Events, Noteworthy - On Monday, December 12th, 2019, Chevy Chase Trust proudly sponsored the Greater Washington Community Foundation’s Montgomery County Celebration of Giving at the Round House Theatre.

    On Monday, December 12th, 2019, Chevy Chase Trust proudly sponsored the Greater Washington Community Foundation’s Montgomery County Celebration of Giving at the Round House Theatre. The network of donors and partners, and local nonprofit grantees were celebrated for growing the spirit of giving and collectively giving more than $120 million to nonprofits serving Montgomery County. This year Lawrence P. Fisher II, Susan Freed, Deb Gandy, Paula Landau, Laura Marsh, Stacy Murchison, Craig Pernick, and Peter M. Welber were honored to attend the Community Foundation’s celebration of the 2019 Montgomery County Philanthropists of the Year, Hope Gleicher and Andy Burness.

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