Takeaways from the Southeastern RIA Summit

Yesterday, Andrea, Melissa, Ben, Tom, and I attended the Southeastern RIA Summit at the Grand Hyatt Hotel in Buckhead. We had the opportunity to hear from industry leaders from across the southeast, and our own Director of Fixed Income, Tom Russell, led a panel on opportunities in fixed income in the current low interest rate environment. Topics covered at the conference include where the market is heading, fixed income, alternative investments, technology in the industry, women in finance, and ESG. Additionally, there were multiple opportunities to exchange ideas with other portfolio managers throughout the day.

The morning started off with a session on projections for the stock market over the next year and where firms are positioning themselves. There was a diversity of opinion on the panel. The representative from Goldman Sachs shared that the firm is expecting changes to the tax code to have a larger impact than the consensus is anticipating which will negatively affect EPS numbers. Another panelist countered that while earnings estimates are 30% higher for next year and that is too high, his firm believes that sentiment has fallen too low due to the confluence of inflation, tax changes, and the labor shortage. Specifically, he pointed out that Democrats have already made concessions on tax rates from their initial proposal, and inflation has historically not correlated with stock market returns. Overall, the temperature of the room was mixed during this session; when asked, about half the room thought that the market would be higher at the end of this year, and over 90% of the room thought that the market would be higher at the end of next year. The panelists shared that, in their experience, their clients have significantly lower sentiment than portfolio managers and are expecting a crash, but they are advising clients to remain fully invested.

Alternative investments were a clear focus across the panels. Real estate, private equity, private debt, and ESG were all topics here. Almost all panelists reiterated a belief that ESG investing will continue to become a focal point, especially among younger generations, and many indicated that an ESG strategy results in outsized returns. A major takeaway was that the definition of ESG is flexible and there are multiple ways to incorporate it into one’s investment process, whether explicitly or on the margins. Real estate, largely brought up by the panelists that work for real estate investment firms, was pitched as an asset class that can provide payments at a rate above the average market return and historically does not correlate with either the stock or bond markets.

Undoubtedly, the highlight of the conference was the afternoon fixed income session led by Narwhal’s Tom Russell. Tom led a panel of Tim Leary from RBC Global Asset Management and Alan Conner of NovaPoint Capital in a discussion about opportunities in the current fixed income environment. The panelists discussed high yield municipal bonds as an area where there is currently an opportunity in the market. Additionally, the group highlighted the potential for 2022 to feature the most Rising Angels, a BB bond that is upgraded to investment grade, ever. While politics and interest rates could change in the coming year, this was not a huge concern for fixed income on the panel. The general theme was to manage duration, be active, and look for smaller, mispriced opportunities.

Lastly, a focus of the conference was on operating as an RIA. Diversity was a major focus, and panelists highlighted the importance of having differing viewpoints in an office, whether it be in terms of gender, race, or life experiences. This is especially important in finance where a major part of the job is observing and drawing conclusions about the world around us. Additionally, panelists talked about the importance of taking advantage of technology to optimize ability to serve clients. Integration of different systems was key. Overall, the conference provided a great opportunity for the Narwhal team to hear from experts on a variety of topics and network with industry leaders.