Document Type

Investment Portfolio

Publication Date

2024

Abstract

We would like to thank you for your service to the Crummer Truist Portfolio. Without your participation, Crummer students would not benefit from the unique insight you bring to managing an active portfolio. We have been fortunate to listen and learn from some outstanding guest speakers who have been generous with their time and expertise: J. Clay Singleton, Emeritus Professor, Crummer Graduate School of Business; Phillip Rich, Chief Investment Officer, United Community Bank; Rasha Mesharafa, Registered Associate, Wells Fargo Advisors; James Bishop, Director, Streamwise Capital; Matej Sušec, Research Analyst, DePrince, Race, and Zollo; Robert Zhang, Senior Research Analyst, DePrince, Race and Zollo; Dr. William Seyfried, Professor, Crummer Graduate School of Business; Marc Miller, Partner, DePrince, Race and Zollo; Rick Ahl, President, Ahl Investment Management; Sean Powers, Executive Director, AdventHealth; Jay Menozzi, Principal and Chief Investment Officer, Orange Investment Advisors, LLC; Kevin Kalicak, Senior Vice President, Darden Restaurants; Jennifer (Anderson) Murphy, AVP, Rockefeller Capital Management; Deryck Harmer, Managing Director, Springlake Partners. SunTrust (now Truist) endowed this portfolio to provide scholarships for future Crummer students and to give current students a practical, hands-on learning opportunity. This year, we are pleased to be able to disburse $50,000 to be used for scholarships. We are extremely grateful for this generous investment in higher education. We have all learned a great deal from this experience and the responsibility of managing real money. Our first challenge is to establish a portfolio position that takes advantage of economic opportunities while avoiding unnecessary risk and conforming to the Crummer Truist Investment Policy Statement (IPS). We are also tasked by the IPS to operate at two levels simultaneously – tactical for the near term, and strategic for the long run. Additionally, this portfolio presents some unusual portfolio management challenges by trading only once a year, in early April. Our tactical approach began with a top-down sector analysis. We established an economic forecast based on research and consultation with economists, including Professor William Seyfried of the Crummer School and Philip Rich of UCBI. We based our equity and fixed income split on that forecast with a 20% allocation to bonds, at the highest level allowed by the IPS. That forecast also drove our allocation among the eleven S&P sectors: Communication Services, Consumer Discretionary, Consumer Staples, Energy, Financials, Healthcare, Industrials, Information Technology, Materials, Real Estate, and Utilities. Based on our economic outlook (which leans towards the optimistic side of the consensus), we tilted the allocation towards sectors that should do well in such a macro environment while paying attention to political factors as well as industry-specific dynamics. Our asset allocation embodies the long-run strategy of our portfolio. The IPS sets asset class ranges from low to moderate risk to keep the portfolio from being whipsawed by transitory market cycles. Our equity allocations signify an opportunity to take on some risk, consistent with our economic outlook through the end of March 2024. We maintain an allocation to a sector ETF in each sector to achieve passive exposure. We also invest in two individual stocks per sector to outperform the sector index. Fixed income is our anchor sector, providing a hedge against the risk of an economic slowdown adversely impacting our equity holdings. Consistent with our flattening yield curve projection, we are at the high end of our IPS range for fixed income at 20% and taking on a bit more interest rate risk than the average permissible duration. Furthermore, we have continued to incorporate investment themes. This year, in addition to Environmental, Social, and Governance (ESG) investing, we also identified Artificial Intelligence as an additional theme in our portfolio selection process. Regardless of a security’s consistency with either of these themes, all recommendations must be undervalued after rigorous quantitative and qualitative analysis. In other words, our intent is not to maximize the ESG or AI impact of our portfolio but to tilt towards these factors. Specifically, the proposed equity holdings in this year’s portfolio have a ESG tilt of 18% and AI tilt of 14%, compared to the S&P 500. Since the onset of the COVID-19 pandemic, we have witnessed extraordinary years in many respects. Inflation levels, monetary and fiscal policies, and global conflicts that were all unprecedented have contributed to an increased level of uncertainty. We do not intend to simply follow the crowd. Yet, echoing the philosophy of Warren Buffett, “our opinions and beliefs, grounded in economics and guided by all of those who have counseled us,” lead us to a strategy that is not significantly different from many investors. Even so, we accept responsibility for our investment decisions. We are investing for the long-term and we have been conservative in our forecasts and recommendations. Simultaneously, in the short term, we are mindful of the need to protect the portfolio’s commitment to scholarships. We thank you for your time and participation in this important endeavor. Sincerely, Crummer Investment Management Team

Additional Files
account_history_graph.pdf (139 kB)
Crummer Truist Portfolio and Benchmarks since inception
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