Eddie Bernhardt, Senior Portfolio Manager and Managing Director of SNW Asset Management, on how the Eurozone debt is affecting the US private wealth management industry.

1. IFG WEALTH MANAGEMENT FORUM
THE PREMIER EVENT FOR NORTH AMERICAN FAMILY OFFICES
April 23-24, 2012, The Ritz-Carlton, Phoenix, Arizona
www.ifgwealthmanagement.com
SNW Asset Management on Growing
Assets through the Eurozone Crisis
FOR IMMEDIATE RELEASE
In today’s globalized world, US investors could be just strong balance sheets and limited exposure to Europe, if
as vulnerable to the Eurozone sovereign debt crisis as any. This means there are good bonds available right
European investors. Limiting exposure to European now, but investors need to know where to look for them. Interview with:
assets is not enough – there could be underlying Eddie Bernhardt
counterparty risks. However, “Waiting for the The opportunities are not necessarily in European banks Senior Portfolio Manager
uncertainty to subside could result in missed – there is still a lot of uncertainty and volatility – but the and Managing Director
opportunities”, according to Eddie Bernhardt, Senior sell-off has made healthy US banks and finance SNW Asset Management
Portfolio Manager and Managing Director of SNW companies cheaper.
Asset Management. Eddie Bernhardt, Senior
What is your outlook on the fixed income market? Portfolio Manager and
Ahead of the IFG Wealth Management Forum 2012 in What are the opportunities in that space? Managing Director of SNW
Phoenix, Arizona, April 23-24, Eddie Bernhardt discusses Asset Management, on how
how private wealth managers can ensure investment Eddie Bernhardt – Investors should prepare for volatility. the Eurozone debt is
portfolios thrive despite the Eurozone uncertainties. Treasury rates at such low levels and economic affecting the US private
uncertainty will lead to bond prices swinging around a wealth management
How can private wealth managers in North fair amount. Fixed income investors cannot assume that industry. SNW Asset
America shield their clients’ assets from the bond markets will be stable and safe. Management will be present
Eurozone debt crisis? at the upcoming IFG
Corporate bonds with wide credit spreads are offering Wealth Management
Eddie Bernhardt – Wealth managers need to look at some value today, but it is not as easy as picking an Forum 2012.
their clients’ overall exposure to the sovereign entities index fund that has experienced a sell-off and riding it
and banks with a large exposure to the countries out. There is value out there in specific municipal,
experiencing a debt crisis. It is not simply about corporate and government backed securities, you just
considering their exposure to European or global equity have to know where to look. Sitting in cash and waiting
mutual funds, but also to the money market mutual for rates to go up is not advisable. Earning zero versus
funds and the counterparty risks of US banks. Some of owning a short-term, low volatility portfolio of bonds
the large US broker dealers have substantial European that will mature in less than five years would give at
counterparty risks. least one or two per cent.
The mutual fund disclosure or the financials of a large How could investors maximize returns on fixed
brokerage firm will not give wealth managers all the income assets?
information they need. Some digging and interpretation
is essential. This means a lot more work for US wealth Eddie Bernhardt – First, you have to know your client’s
managers. risk tolerances and investment objectives. Every
portfolio we construct is client specific and can be
What investment opportunities has the European customized to meet their unique needs. Second, look for
debt crisis brought about? the strongest credits and bond structures in today’s
market, which should include out of favor sectors. Third,
Eddie Bernhardt – We have seen the typical panicked monitor portfolios daily to assure the holdings continue
sell-off. Most finance companies bonds spreads have to offer a good risk-reward trade-off for the client. Often
widened, bond prices have declined, and yields are up. It times the way to maximize returns is not to buy the
does not matter to the market if these entities have bond with the highest yield, but to look for bonds with
exposure to Europe or not. The markets are throwing all attractive yields relative to their credit quality. This can
finance into the same bucket, including companies with give investors the added benefit of price appreciation.
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2. IFG WEALTH MANAGEMENT FORUM
THE PREMIER EVENT FOR NORTH AMERICAN FAMILY OFFICES
April 23-24, 2012, The Ritz-Carlton, Phoenix, Arizona
www.ifgwealthmanagement.com
What advice for making a fixed income portfolio tax-efficient could you share?
Eddie Bernhardt – Tax efficiency can come in the form of tax free municipal bonds or capital gains management. First, we make sure to know the
clients’ marginal income tax rate and how tolerant clients are to taking short or long term capital gains. If they are in the 25 to 28 per cent bracket,
corporate bonds after tax make a lot of sense. If the client wants to limit or maximize capital gains in the portfolio we manage, it is noted. In high
income tax states, state-tax free government agency bonds may make sense. Doing the tax math and moving clients in and out of investment grade
sectors would give them a higher effective return.
What is unique in your approach to finding value in the marketplace?
Eddie Bernhardt – We manage separate accounts to each client’s investment objectives and we open up the financials and dig in to the credits we
monitor. That is how we maximize returns for each client and that is how we find value. By having a clear understanding of the risks inherent in each
bond we purchase, we can find opportunities in undervalued securities while avoiding overvalued bonds. Investors should not depend on the credit
rating agencies, index funds, or generic fixed income strategies for their high net worth clients. Rating agency models are flawed and generic
products aren’t built to meet your client needs. By looking across the municipal, corporate, and government bond markets we are able to build
portfolios that fit a client’s unique needs. Investing is really about doing research, finding your own value in the marketplace, and executing a strategy
based on that for each client.
Salpi Balian, Press Manager – IFG, pressifg@ifgemea.com
The IFG Wealth Management Forum 2012
IFG’s Wealth Management Forum 2012 will take place at the Ritz-Carlton, in Phoenix, Arizona, April 23-24, and provides a unique platform for
investment decision makers from single and multi-family offices to engage in vibrant benchmarking sessions and gain practical solutions and best
practices to achieve optimal portfolio returns.
For more information please send an email to pressifg@ifgemea.com or visit the event website at www.ifgwealthmanagement.com
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SNW Asset Management
SNW Asset Management is a fixed-income investment management firm. Its sole focus is the active management of separate accounts that are
uniquely tailored for each client. They conduct in-depth credit research on each individual bond held, which eliminates dependency on rating agencies
and allows them to maximize yield while controlling risk.
www.snwam.com
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