How San Antonio financial managers are advising clients amid record inflation

Kyle Grest CFA

SAN ANTONIO BUSINESS JOURNAL – Some San Antonio financial managers have changed investments to calm clients’ fears about the impact of record inflation and the Federal Reserve’s moves on their portfolios.

The Consumer Price Index, released July 13, reported prices rose 9.1% in June compared to the same month a year ago, according to the Bureau of Labor Statistics. The largest year-to-date increase since 1981. This has led many to believe the Federal Reserve will continue raising interest rates by 75 to 100 basis points.

Marilou Moursund, partner and co-founder at Crossvault Capital Management, said her firm had begun a change of pace in 2021. It switched from cyclical stocks to ones that pay dividends, and she said some companies that could benefit from inflation have been added to equity portfolios.

Crossvault began to build up cash positions as the firm became more aware of an economic slowdown.

San Antonio-based U.S Global Investors (NASDAQ: GROW) announced it would adopt a similar policy of building up cash in anticipation of a recession, a move it made before the CPI report.

“In our conversations with our clients over the last few months, the prevailing questions are when do we think this will end or at least abate, and what are our thoughts about a recession,” said Moursund in an email to the Business Journal. “Even if there is further downside in the short term, consumer and business fundamentals remain supportive, the financial system is healthy and the unemployment rate remains low.”

JPMorgan Chase CEO Jamie Dimon in an interview with Andy Medici for The Playbook expressed a similar position, saying the overall business climate remains strong.

Kyle Grest, Senior Vice President and Senior Investment Advisor at 1900 Wealth, said his firm made the move to invest in dividend-paying stocks due to their more attractive value and better cash flows. Grest said when compared to value stocks, which are more likely to offer dividend payments, growth stocks have been overvalued. He acknowledged the Federal Reserve raising rates is likely to have an impact on clients’ portfolios.

Grest is not alone in acknowledging how Fed policy will impact the portfolios, specifically on stocks, which he said can occupy 60% to 70% of a client’s portfolio.

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