Investment Changes Summary
2022 Year in Review
2022 was a challenging year in the markets driven by the Federal Reserve raising interest rates at the fastest clip in over 40 years, causing painful ripple effects across the stock and bond markets. These rate hikes brought the Fed Funds rate to its highest level in over a decade. We are officially out of the ultra (artificially?) low-interest rate era of the past decade with no indicators of going back. With these factors in play, we were certainly more active with portfolio and investment changes in 2022.
2022 Investment Changes
While this is not an exhaustive list of trades and rebalances performed this year, the following highlights many of our investment changes throughout the past year:
• Repositioned shorter-term bonds into money market funds due to more attractive short-term yields with minimal interest risk from future Fed rate hikes
• Repositioned equity holdings to align with a focus on quality balance sheet companies
• Reduced concentrated technology holdings
• Increased exposure to larger, dividend paying companies
• Reduced exposure to infrastructure oriented companies, repositioning to Mid-Cap Value companies
• Eliminated Large Cap Covered Call strategy fund in favor of a combination of higher-yielding Money Market and
quality balance sheet Large Cap strategy
• Shortened bond fund durations early in the year in anticipation of Fed rate increases
Our Investment Strategy
Our focus for investment portfolios heading into 2023 are as follows:
• Primary focus on consistent dividend payers, quality balance sheets, and lower leveraged companies • Maintaining higher-yielding money market funds to minimize impact of future Fed rate hikes
• Less and more selective tech-oriented companies
As you know, we follow a disciplined and diversified asset allocation process to building our portfolios. We believe in long-term investing, not short-term speculation. We lean on our LPL Research team of 50+ professionals for ongoing asset allocation and fund screening. (Remember, LPL offers no proprietary products, which enables us to make objective decisions.) Then, we utilize a secondary screening through Morningstar (a third-party investment research company) for another layer of due diligence.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Tactical allocation may involve more frequent buying and selling of assets and will tend to generate higher transaction cost. Investors should consider the tax consequences of moving positions more frequently.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Stock and mutual fund investing involves risk including loss of principal. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and asset allocation do not protect against market risk.
No strategy assures success or protects against loss.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.
BridgeQuest Wealth Strategies
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