Thematic Investing involves capitalizing on powerful secular trends, disruptive ideas, innovations and economic forces that are constantly reshaping the world. Thematic investing builds portfolios of companies positioned to exploit these transformational changes and, just as importantly, avoids companies that will be disrupted by creative destruction.

“The strong basis for stock selection comes from whittling down the thousands of public securities around the world to a manageable group- identified through our thematic research. This screening process is perhaps the most important part of investing.”

Amy Raskin, Chief Investment Officer

Thematic Investing doesn’t fit into any of Morningstar’s 115 fund categories or neatly into one of its style boxes. It emerged in response to the extreme segmentation of the investment industry.

News & Noteworthy

  • Q & A | Frederick M. Hopkins, JD, CFA | Wealth Advisor Posted in: Noteworthy, People - At Chevy Chase Trust, our Wealth Advisors build relationships by thoroughly understanding the ever-changing needs of our clients and assembling a team of experts to ensure that all those needs are met. Meet Fred M. Hopkins, JD, CFA - Wealth Advisor and Relationship Manager.

    Tell us about your role here at Chevy Chase Trust.

    As a Wealth Advisor, I take the lead in coordinating our advice and services across a host of specialized but related disciplines, such as investment management, financial, tax, and estate planning, liquidity planning, trust administration and philanthropic planning. It is my responsibility to ensure that we fully utilize our firm’s expertise and capabilities to best meet each client’s needs.

     

    Tell us about your background.

    I hold a Juris Doctor and am a CFA Charterholder, with over two decades experience in wealth management. Over time, my role has expanded from providing legal input on trust and tax planning for clients to broadly coordinating the input from our team of investment and planning professionals to ensure that each client receives integrated and comprehensive wealth management advice.

    A Maryland native, I have lived near the Chesapeake Bay for all my life, apart from college in New England and a few years living and working in New York City. My wife and I are both from large families with deep ties to this area, and we enjoy spending as much free time as possible with family and friends by the water.

     

    What led you to a career in financial services?

    Growing up, I was influenced by several role models in my family who had interesting and gratifying careers in the financial services industry. My father was an attorney and CFA (one of the first in Maryland) who managed investments for clients ranging from local business owners to international foundations. From that perspective, it was a natural for me to pursue a degree in Economics when I started at Williams College, and to later obtain a Juris Doctor from the University of Maryland Law School – all of which put me on a path to my current role as a Wealth Advisor.

     

    What’s the most rewarding part of the job?

    I have always had a natural affinity for working with people in an advisory role. As a Wealth Advisor at Chevy Chase Trust, I enjoy making a difference in our clients’ lives by helping them navigate through the complexities of wealth management.

     

    What makes Chevy Chase Trust different from other firms where you have worked?

    Our private ownership structure is a fundamental differentiator. It allows us to take a long-term view and invest in our business based on what is best for our clients rather than short-term profitability. This is different from many publicly owned institutions, which focus on the short-term impact to the firm’s quarterly earnings.

     

    Have you had a mentor and what are some lessons learned?

    I have been fortunate to have several mentors over the course of my career, including senior managers, senior professionals, business development leaders, and friends. They have collectively imparted many lessons to me, but especially the importance of building relationships in life and work and balancing the technical aspects of any decision with sound common sense and a focus on the people side of the equation.

     

    What are your interests in the community?

    My current interests include the renovation and preservation of a historic Maryland home and serving on the Investment Committee for the Episcopal Diocese of Maryland.

     

    What advice would you give to someone considering a career in investment management/financial services?

    Formal training in certain technical areas is extremely helpful, but I believe that it is equally important to focus on critical thinking and people skills.

     

    Considering all the people with whom you have worked, what are the most important attributes for success?

    Early in my career, I viewed intellectual curiosity and hard work as key attributes for success. Over time I have expanded the list to include a healthy degree of humility, a sense of humor, perseverance, and the enjoyment of working with people.

     

    Fred M. Hopkins Bio »

    Important Disclosures

  • Chevy Chase Trust Welcomes Kevin Heilenday Posted in: Noteworthy, People - Chevy Chase Trust is pleased to welcome Kevin Heilenday as Associate General Counsel and Director.

    Kevin Heilenday has joined Chevy Chase Trust as Associate General Counsel and Director. Kevin is responsible for supporting the General Counsel in all legal matters. He has extensive knowledge and experience with respect to investment funds, corporate governance, securities regulation, capital markets, mergers and acquisitions, and other complex transactions.

    Read the full Washington Business Journal article here.

     

    Important Disclosures

  • Chevy Chase Trust | 2021 Account Information Posted in: Featured, Insights, Noteworthy - Details regarding the timing and availability of your Chevy Chase Trust account tax forms.

    2021 Tax Documents

    To allow you to plan for the preparation of your 2021 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 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.

  • Fourth Quarter, 2021 Posted in: Featured, Investment Update, Latest News, Noteworthy - After another outsized year for the S&P 500, what lies ahead? Will the technology sector continue to lead? Learn our perspective in our year-end Investment Update.

    U.S. Equities Shrug Off Insurrection, Infections and Inflation

    2021 was a difficult year. It started with an insurrection, witnessed record COVID-19 infections and ended with the highest inflation in almost 40 years. But U.S. equity markets largely shrugged off these events. The S&P 500 generated a total return of 28.7% in 2021, a remarkably strong result after its 18.4% return in 2020. The S&P 500 also outperformed major non-U.S. benchmarks, including the MSCI EAFE and MSCI EM indices, which delivered total returns of 11.9% and -2.5%, respectively. Much of the S&P 500’s outperformance in 2021 was due to the rapid reopening of the U.S. economy and resurgent consumer spending, driven by vaccine rollouts and the impact of Pandemic-driven fiscal and monetary stimulus.

     

    A Long Bull Run

    Impressive as S&P 500 returns have been for the past two years, its longer-term performance is more noteworthy. Over the past 10 years, the S&P 500 has returned 362%, or an average of 16.5% per annum. The outsized performance of S&P technology stocks – and a small subset of high growth leaders – propelled the Index higher.

     

    Ten Year Annualized Return for S&P 500 Sectors and Five Largest Stocks by Market Cap

    Source: Trahan Macro Research

     

    After outperforming in each of the last eight years – including 2020, when it beat the S&P 500 by a stunning 29 percentage points – the technology sector, broadly defined, now accounts for roughly 40% of the S&P 500. The five largest stocks by market capitalization – Apple, Microsoft, Alphabet (Google), Amazon and Tesla – now account for a greater share of the Index than at any time since the 1960s. For most of the S&P 500’s history, the largest companies have come from a mix of sectors and industries. We’ve never seen anything close to this level of concentration, even during the Dot-Com Bubble.

    After this record run, U.S. technology related stocks are expensive, trading at an average of 27 times forward earnings at year end. This level is higher than at any point in 20 years on an absolute and relative basis. About 34% of tech-related stocks are trading at more than 10 times revenue. About 32% are unprofitable. 

    The outperformance of broader tech has also contributed to Growth stocks’ sustained outperformance versus Value stocks. The valuation gap between Growth and Value stocks has reached an all-time high.

     

    Record Valuation Gap Between Growth and Value

    Forward Price-to-Earnings Ratio of S&P Pure Growth and Pure Value 

    Source: Trahan Macro Research

     

    For much of the past decade, market action has been dominated by one trade: buy the big tech leaders and ignore everything else. That strategy paid off handsomely for years, particularly for active managers focused solely on Growth, and for passive investors with a large exposure to these stocks through their ownership of the Index.

    But all good things must come to an end. Although extreme imbalances can last longer than expected, they cannot be sustained indefinitely. Ultimately, we expect the tech sector and the big winners of the past decade to lose leadership. This may occur suddenly (as when the Dot-Com Bubble burst in 2000 or when the Nifty Fifty broke in 1974) or slowly, by lagging other sectors’ returns.

     

    Structural Changes Afoot

    We expect macroeconomic changes that are underway to drive the rotation away from tech and alter the market leadership that dominated the 2010s. 

    The U.S. economic rebound from the COVID-related recession has been truly remarkable. 

    • Adjusted for inflation, U.S. real GDP grew at an estimated 5.6% in 2021, faster than in any year since 1984. 
    • The unemployment rate dropped from 14.8% to 4.2% in just 19 months. After the Great Financial Crisis, it took almost a decade for the unemployment rate to achieve a similar decline. 
    • U.S. corporate earnings as a percent of GDP are now at an all-time high. 

    Although we expect economic growth to moderate in 2022 from these record levels as fiscal support fades and the Fed begins to raise interest rates, we think it will remain well above the very low levels of the last decade. Growth in consumer spending should remain healthy even as stimulus declines. After the deprivations of the pandemic, consumers are eager to spend and well-positioned to do so. U.S. household debt service as a percent of income is near all-time lows due to a decade of deleveraging, wealth created from rising asset prices, and savings accumulated during the pandemic. 

    This growth in consumer demand has occurred alongside a broad set of supply constraints, leading to the recent rapid rise in inflation. The Consumer Price Index rose to 6.9% in November, its highest level since 1982.

    We have been focused on inflation for some time. In our second-quarter Investment Update, we shared our proprietary framework for assessing both short-term and long-term inflation pressures. We have continued to update our views over the past six months as inflation pressures intensified and the topic became central to the market debate. 

    Our framework led us to predict surging near-term inflation. And while many investors believe inflation will be transitory, our framework leads us to predict that inflation will moderate but stay higher than at any time since the 1980s.

     

    Chevy Chase Trust Inflation Framework

    Drivers of Inflation over Different Time Frames

     

     

    Portfolio Positioning

    We expect higher inflation and the pandemic recovery to continue to impact financial markets in the years to come. The exact timing and magnitude of these events are difficult to predict with confidence. Because of this timeless challenge, we have always focused our energies principally on understanding thematic secular drivers of company and market value. That is truer now than ever. 

    We’re relying on our deep research in our six portfolio themes to find stocks with advantages that will support earnings growth and lead to outperformance in the years to come. Each of our themes (End of Disinflationary Tailwinds, Heterogeneous Computing, Long-Term Crisis Beneficiaries, Next-Generation Automation, Molecular Medicine, and Increasing Wealth Concentration) appears to be gaining traction. 

    In sector terms, we have increased positions in value-oriented Energy and Materials firms, which generally benefit from inflation, and we’ve maintained an overweight in the historically defensive Healthcare sector. Although many of our healthcare holdings are more “Growth-y” than the average healthcare stock, we think several of these companies are well-positioned to emerge as new leaders in a rapidly changing healthcare landscape. We are willing to hold them even if large-cap Growth stocks, as a group, lose favor for a time. 

    We have reduced the portfolios’ overweight of Growth stocks, particularly Technology stocks, over the past few quarters. While our portfolios have retained core positions in some of the big winners of the last decade, the portfolios are now underweight the big tech-related stocks mentioned earlier. Granted, many of these companies still have favorable characteristics, such as high revenue per employee, limited competition and ample growth opportunities. But their valuations fully reflect these advantages, and the prospect of higher inflation increases the odds of strong relative returns for other stocks. 

    Our portfolios have become more balanced across factors and less tilted to Growth than at any time in the past eight years. We think this both reduces risk and increases the odds that the portfolios will outperform as markets navigate a complex set of cross currents. 

    Click here for a printable version of the Investment Update.

     

    Important Disclosures

  • Chevy Chase Trust | Sargent Shriver Elementary & Linkages to Learning Posted in: Community, Noteworthy - We are honored to partner with the Linkages to Learning program for a twelfth year in a row supporting local families in need.

    Chevy Chase Trust employees donated more than 200 gifts to children of families in need from Sargent Shriver Elementary School this holiday season. We are honored to partner with the Linkages to Learning program for a twelfth year in a row.

  • Chevy Chase Trust Welcomes Frederick M. Hopkins, JD, CFA Posted in: Noteworthy, People - Frederick M. Hopkins, JD, CFA has joined Chevy Chase Trust as Managing Director, Wealth Advisor and Relationship Manager.

    Frederick M. Hopkins, JD, CFA has joined Chevy Chase Trust as Managing Director, Wealth Advisor and Relationship Manager. Fred is responsible for providing comprehensive wealth management advice to families, individuals, foundations and endowments.

    Read the full Washington Business Journal article here.

     

    Important Disclosures

  • Chevy Chase Trust supports Sargent Shriver Elementary School Posted in: Community, Noteworthy - Chevy Chase Trust was honored to provide Thanksgiving groceries to 51 families in the Sargent Shriver Elementary School Linkages to Learning program.

    Chevy Chase Trust was honored to provide Thanksgiving groceries to 51 families in the Sargent Shriver Elementary School Linkages to Learning program. Thank you to all of our colleagues who volunteered their time to make this possible.

  • A Virtual Event: “Family Wealth & Well-Being: Rethinking Traditional Inheritance Planning” Posted in: Events, Noteworthy, Video - What happens at the intersection of well-being theory and inheritance planning? Watch to learn more.

    10.27.2021 – Looking to increase beneficiary well-being? Watch our Family Wealth & Well-Being virtual event to learn more.

    Important Disclosures

  • Food for Thought: Maximize Your Wealth Posted in: Noteworthy, People, Video - Will your wealth allow you to purchase a vacation home or invest in a new business? Hear from Laly Kassa, Co-head of the Chevy Chase Trust Planning Group, on how she advises clients on these and other important questions.

     

    Will your wealth allow you to purchase a vacation home or invest in a new business? Hear from Laly Kassa, Co-head of the Chevy Chase Trust Planning Group, on how she advises clients on these and other important questions.

     

    Lean more about Estate Planning.

    Learn about Financial Planning.

    Important Disclosures

  • Food for Thought: Estate Planning Tips Posted in: Noteworthy, People, Video - What gets overlooked during the estate planning process? Learn what to watch out for from Elizabeth Kearns, Co-Head of the Planning Group.

     

    What are three important steps everyone should take to ensure their estate plan is complete? Hear from Elizabeth Kearns, Co-Head of the Planning Group.

     

    Learn about Financial Planning.

    Important Disclosures

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