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

  • 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 Closer Look at the Life and Mind of Leonardo da Vinci Posted in: Events, Noteworthy, People, Video - Join Dr. Knox on this virtually guided tour along the Leonardo Trail, starting in the heart of Tuscany and ending in the Loire Valley. Explore Leonardo’s life and work and learn about recent discoveries that offer a deeper understanding of the mind behind the master.

     

    Chevy Chase Trust proudly presented a virtual experience: A Closer Look at the Life and Mind of Leonardo da Vinci. The evening was guided by Columbia University professor, Dr. Page Knox.

    Join Dr. Knox on this virtually guided tour along the Leonardo Trail, starting in the heart of Tuscany and ending in the Loire Valley. Explore Leonardo’s life and work and learn about recent discoveries that offer a deeper understanding of the mind behind the master.

    Page Knox is an adjunct professor of Art History at Columbia University and a lecturer at the Metropolitan Museum of Art where she gives public gallery talks and lectures in special exhibitions and the permanent collection, teaches classes and the museum, and leads groups for Travel with the Met.

     

    Important Disclosures

  • 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.

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  • 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.

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  • 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.

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  • Chevy Chase Trust supports Leadership Greater Washington Posted in: Community, Noteworthy - Chevy Chase Trust was proud to sponsor Leadership Greater Washington's 35th annual Celebration of Leadership on October 12.

    Chevy Chase Trust and Jeff Whitaker, Larry Fisher, Marc Wishkoff, Blake Doyle, and Stacy Murchison (’20) were proud to sponsor Leadership Greater Washington’s 35th annual Celebration of Leadership on October 12. This year’s honoree was Lyles Carr (’87), Senior Vice President of The McCormick Group.

  • Third Quarter, 2021 Posted in: Insights, Investment Update, Latest News, Noteworthy - Due to choppiness in the last two weeks of September, the S&P 500 Index ended the third quarter roughly flat. Nonetheless, the Index has delivered a strong...

    Finding Balance in A Rapidly Changing Market

    Due to choppiness in the last two weeks of September, the S&P 500 Index ended the third quarter roughly flat. Nonetheless, the Index has delivered a strong, 16% total return year to date. It is now almost double its pandemic-driven low and more than 25% above its pre-pandemic high. This rebound has been the largest and fastest post-recession recovery in the last 80 years.

     

     

    S&P 500 Price Change in 553 Days from Bottom

    Note: 553 days chosen to capture pandemic-related low through September 30, 2021
    Source: Bloomberg and Standard & Poor’s

     

    There are several reasons for these strong returns, including robust economic and profit growth, plentiful liquidity supplied by the world’s largest central banks, interest rates near record lows, and healthy consumer balance sheets. All these factors suggest a recession is unlikely to unfold within the next 12 months. Since bear markets typically occur alongside recessions, investors have felt comfortable buying during the occasional shallow dips.

    While we understand the optimism driving the market higher, there are also reasons to worry:

    • Economic growth may not meet now-lofty expectations. Very high GDP growth in the second quarter prompted analysts to lift economic and profit expectations for the rest of this year and 2022. If economic growth reverts to good, but not great, levels, disappointing earnings growth or negative earnings revisions may follow.
    • Valuations are very high by almost any metric. Whether one compares stock prices to earnings, sales, book value or free cash flow, equity markets are expensive. Disappointing results that lower earnings expectations typically lead to larger corrections when valuations are high.

     

     

    S&P 500 Valuation: Current Percentile Ranking Relative to History

    As of  September 30, 2021
    Source: Strategas and Center for Research in Securities Prices

     

    • Elevated inflation may persist longer than expected. This is perhaps the risk we worry about most. High inflation is typically associated with high interest rates and low inflation with low interest rates. Currently, inflation is high, but interest rates are low. This disconnect is because many investors are betting that after a short bump due to economic reopening, inflation will fall rapidly and remain subdued thereafter. If, however, the currently high levels of inflation do not decline as expected, interest rates may climb. This scenario would be particularly troublesome for Growth stocks because higher rates would reduce the present value of their often-distant future cash flows.

     

    Short, Sharp Intra-Market Rotations

    Interest rates are at extremely low levels; therefore, even small interest rate moves are leading to big changes in equity market performance. The correlation between equities and the 10-year U.S. Treasury Bond yield has never been higher. Over the past four quarters, this has resulted in shorter, yet sharper, equity market movements and rapid rotations between Growth and Value stocks.

    • During the fourth quarter of 2020 and the first quarter of 2021, interest rates rose sharply, and Value stocks outperformed Growth. From September 30, 2020, to March 31, 2021, the 10-year U.S. Treasury yield rose from 0.68% to 1.74% and the Energy sector of the S&P 500 rose 67%, while the Growth-heavy Technology sector only increased 14%. After several very difficult years, Value stocks were finally having their day in the sun.
    • These glory days were short lived. From March 31, 2021, to August 4, 2021, the 10-year U.S. Treasury yield declined from 1.74% to 1.12%, and Growth stocks outperformed again. During that period, the Technology Sector outperformed the Energy Sector by 16%.
    • Then, in the last few weeks of September, 10-year U.S. Treasury yields moved sharply higher again, rising from 1.30% to 1.54% in just four trading sessions. If this continues, another period of Value outperformance is likely.

    We expect these short, sharp rotations to continue until there are clearer indications of the future rate of economic growth over the next decade. Unfortunately, this isn’t likely any time soon. The unprecedented economic shutdown during the pandemic and subsequent reopening of the global economy make analyzing trends in economic data extremely difficult, and many variables may still affect the economy’s direction.

    We believe the most likely outcome is that economic growth remains robust for the next few quarters as more of the globe reopens and consumers continue to spend the fiscal stimulus distributed during the pandemic. However, we do not think rapid growth will last long, as even moderately higher interest rates are likely to have a negative impact on both the real economy and financial markets.

     

    Portfolio Positioning

    Rapidly changing market leadership is difficult for even the nimblest portfolio managers, and capital gains tax and trading expenses make it costly to try to catch every zig and zag. Thus, short-term trading has never been our approach. We’re longterm investors.

    In this difficult market, we have positioned client portfolios to be well-balanced between Growth and Value stocks. As a result, our model portfolio has lower valuations relative to its benchmark than at any time in the last eight years, while maintaining above-market rates of earnings growth.

    We hold our Value and more cyclical stocks primarily in our End of Disinflationary Tailwinds and Next Generation Automation themes, and to a lesser extent, our Crisis Beneficiaries theme. Many of these stocks have strong current cash flows and dividend yields. If inflation remains relatively high, we think interest rates will rise further, and stocks such as these will outperform. Given the deep discounts at which Value stocks are trading, these holdings are likely to pay off in the short term even if inflation is only marginally higher than expected.

    Growth stock holdings dominate our Molecular Medicine, Heterogeneous Computing, and Wealth Concentration themes. A large free cash flow stream that can grow at an above-market rate is indeed valuable, especially if we’re right about economic growth slowing in 2022. Our Thematic investment approach seeks to identify such stocks, emphasizing those that other investors do not yet fully appreciate.

    We believe our current balanced approach is well suited to the times.

     

    Click here for a printable version of the Investment Update.

    Important Disclosures

  • Chevy Chase Trust Ranks on list of CNBC’s Top 100 Financial Advisors 2021 Posted in: Insights, Latest News, Noteworthy - More than 38,000 firms were analyzed on a variety of core data points ranging from compliance records and years in the business to total accounts and assets under management.

    Chevy Chase Trust is proud to be named to CNBC’s Top 100 Financial Advisors for 2021. More than 38,000 firms were analyzed on a variety of core data points ranging from compliance records and years in the business to total accounts and assets under management.

    View CNBC’s rankings here.

     

    Learn more about our Global Thematic Investing at Chevy Chase Trust.

    Important Disclosures

  • President & CEO | Jeff Whitaker Posted in: Latest News, Noteworthy, People - Learn about Jeff Whitaker’s return to the DMV as President and CEO of Chevy Chase Trust, the challenges he’s faced, and the firm’s next big goals.

    Washington Business Journal – 10. 2021: “For Jeff Whitaker, stepping into the role of president and CEO of Chevy Chase Trust marks a full circle moment.

    Born and raised just a few blocks away from the trust’s current offices in Bethesda, Whitaker went on to stints outside of the region at Bridgewater Associates, Berkshire Partners and JPMorgan Chase & Co. He accepted the role at Chevy Chase Trust early this year after a nationwide search to replace the firm’s previous leader, Peter Welber, who had held the CEO title for 17 years.

    The firm — which held $32 billion in assets under management as of 2020 and employed 110 people, per Washington Business Journal research — has been embracing remote work and virtual sessions to help expand its client base. “The Zoom meetings are here to stay,” Whitaker said.”

    Read the full article in the Washington Business Journal.

     

    Important Disclosures

  • Barron’s Feature | Jeff Whitaker & Amy Raskin Posted in: Featured, Latest News, Noteworthy, People - Read the Barron’s article about Chevy Chase Trust’s global thematic investing as the firm is named to Barron’s 2021 Top 100 RIA Firms list.

    Barron’s, September 2021: Chevy Chase Trust is proud to be named to Barron’s 2021 Top 100 RIA Firms list for the third year in a row. This is a testament to the hard work and dedication of a diverse and experienced team of more than 100 professionals. Jeff Whitaker, President & CEO, and Amy Raskin, Chief Investment Officer, were interviewed for the Barron’s article linked below that explores our global thematic investing strategy.

    Click here to read the full article.

     

    Important Disclosures

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