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Frost's Stringfellow: Consumer Sectors Still Attractive (Audio) · Bloomberg Intelligence

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  Speaker 1: Katherine Calderie. You're listening to Taking Stock with Pinn Fox
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  Speaker 1: and Kathleen Hayes on Bloomberg Radio. What's hurting the markets?
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  Speaker 1: Can consumers drive it fast enough to attempt the feed
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  Speaker 1: into another interest rate increase? And is there a new
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  Speaker 1: debt bubble? We've heard some FETE officials worry allowed about that.
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  Speaker 1: And above all, what does this all mean for your investments?
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  Speaker 1: Were very happy to welcome to the show now. Tom Stringfeld,
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  Speaker 1: chief investment officer at Frost Investment Advisors with eleven point
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  Speaker 1: one billion dollars of assets under management across all asset classes,
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  Speaker 1: including the firm's five star rated fund f A t
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  Speaker 1: r X, based in San Antonio in New York City today.
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  Speaker 1: So Tom, thanks for stoff by. Appreciate it very much.
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  Speaker 1: So tell us a little bit more about Frost Investment
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  Speaker 1: Advisors UM and your your five star rated fund. We'll do.
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  Speaker 1: Frost is a Texas BACE company, Our parent is Frost Bank.
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  Speaker 1: Our investment advisor was fun out of the Wealth Advisor
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  Speaker 1: Group back in two thousand and eight, and Uh, at
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  Speaker 1: that point in time, we were at about four billion.
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  Speaker 1: We've since grown to eleven billion. We've launched a number
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  Speaker 1: of mutual funds, some institutionals, some retail class. Uh. You
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  Speaker 1: mentioned one of the funds that's our fixed income total return.
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  Speaker 1: We have both an institutional class and a investor class.
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  Speaker 1: Toss a little bit about your investment strategy and the
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  Speaker 1: themes that you see playing out absolutely the there's a
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  Speaker 1: number of strategies. We run traditional equity, we run traditional
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  Speaker 1: fixed income. The equity is a value and growth MidCap
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  Speaker 1: bent on the fixed income. It's credit. It's a total return,
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  Speaker 1: which is an intermediate and low duration. Those are are
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  Speaker 1: primary funds. We also have ascid allocations strategies. So the
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  Speaker 1: clients that we have worked with over the years tend
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  Speaker 1: to run the we'll call the traditional institutional, traditional high
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  Speaker 1: net worth clients. So you know, we're very cognizant of
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  Speaker 1: the macro events driving the market. Um. You know, those
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  Speaker 1: tend to be the the most impactful on traditional investing,
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  Speaker 1: both on the fixed income side and the equity sign
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  Speaker 1: so on the on the private wealth management side, how
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  Speaker 1: has your business been affected by the big downturn and
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  Speaker 1: energy in you know, Texas. I know Texas is more
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  Speaker 1: diversified than it used to be. Nevertheless, still a pretty
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  Speaker 1: big deal. And I would think there's a lot of
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  Speaker 1: a lot of people who are wealthy in Texas or
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  Speaker 1: are they Are they in a different position than they
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  Speaker 1: weren't As it aff at your business, I would the answers, yes,
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  Speaker 1: the the impaire As you mentioned, Texas is a lot
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  Speaker 1: more diversified, and I can tell you the impact to
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  Speaker 1: our our base customer on our investment side was relatively
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  Speaker 1: unchanged this time around. You know, it speaks to the
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  Speaker 1: diversification of the of this of the state, and i'd
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  Speaker 1: say the diversification of our of our investment client base.
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  Speaker 1: As you know, Surprisingly, as the old prices were tanking,
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  Speaker 1: we talked a lot about what the impact would be
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  Speaker 1: to the consumer ultimately, which was going to be a
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  Speaker 1: little bit more money in their pocket, whether they used
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  Speaker 1: it to pay off debt or they used it to
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  Speaker 1: save you know, Eventually that started to resonate. I think
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  Speaker 1: we eventually saw it actually taking place with our consumers
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  Speaker 1: and and you know, consumer health started improving. So the
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  Speaker 1: impact was definitely felt in certain parts of the state
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  Speaker 1: prone to energy. You know, West Texas, South Texas are
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  Speaker 1: great examples, but overall for most of the state, you know,
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  Speaker 1: we saw unemployment head south, but you still saw a
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  Speaker 1: fairly stable economy, a fairly stable economy. Is it too
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  Speaker 1: early do you think for people to start buying and
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  Speaker 1: inchy assets. I'll tell you I've heard a number of
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  Speaker 1: industry we'll call them experts here recently talking about the
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  Speaker 1: time is still now that all prices are attractive moving
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  Speaker 1: into the fifty dollar barrel range. The problem with a
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  Speaker 1: number of the experts is, I don't know anybody that's
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  Speaker 1: actually gotten all prices right over any period of time.
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  Speaker 1: When it's all fit and done, All prices are going
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  Speaker 1: to depend on the emotions of the market. So tell
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  Speaker 1: me about your bond strategy right now, because we have
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  Speaker 1: one story on the Bloomberg today about this very very
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  Speaker 1: narrow range that treasury bonds, sovereign bonds are locked into.
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  Speaker 1: And of course there's the bank in Japan that wants
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  Speaker 1: to steepen the yield curve. There's big of being that
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  Speaker 1: started buying corporate bonds ECBs open that I got the
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  Speaker 1: doorp into buying more bonds as well. You've got very
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  Speaker 1: low yield, You've got a debate over how much yields
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  Speaker 1: are going to It seems to me, what do you
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  Speaker 1: do just to stick in the shortest term bonds possible
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  Speaker 1: for a while? Now a lot of this gonna be
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  Speaker 1: answered A lot better buy out of our fixed income.
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  Speaker 1: I'll give you the the overview. The total return fund,
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  Speaker 1: which I'll tell you a few years ago was around
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  Speaker 1: two hundred million. Now it's pushing two billion actively managed.
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  Speaker 1: And what that means is the team can move up
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  Speaker 1: and down the duration spread by plus minus three to
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  Speaker 1: the intermediate. So what that does allow them to do
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  Speaker 1: is manage an intermediate like strategy with the duration of
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  Speaker 1: around three what's minus today and in a fairly attractive yield.
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  Speaker 1: I want to say it's it's somewhere in the three
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  Speaker 1: and three quarters for sent range today. But it is
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  Speaker 1: a group that it's not afraid of stepping into assetbacks
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  Speaker 1: when it's time, treasuries when it's time. But what you
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  Speaker 1: are seeing is a little more defensive strategy in anticipation
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  Speaker 1: of that inevitable hike. You know it's inevitable. We've were
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  Speaker 1: missing the timing at this point. We've recently spoken about
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  Speaker 1: the new SMP industry group for the Real Estate Investment
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  Speaker 1: Trust used to be part of financials. Comes about that
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  Speaker 1: specific industry and whether you think that big investors are
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  Speaker 1: going to have to own a piece of this and
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  Speaker 1: that could help the stocks just because you've got to
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  Speaker 1: own something. I don't disagree. Uh, Given it was a
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  Speaker 1: major slice of the financials. Given it is a new sector,
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  Speaker 1: I think by definition you're going to see the passive
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  Speaker 1: moving into it. You're going to see large institutional managers
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  Speaker 1: moving into it. It becomes a self fulfilling prophecy at
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  Speaker 1: that point in time. So I'm actually kind of positive
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  Speaker 1: and I find it interesting. You know, it's the real
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  Speaker 1: estate sector has had a nice run. I don't think
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  Speaker 1: for those reasons that run is over again. So in equities,
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  Speaker 1: where do you see the most value? Where? Where your
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  Speaker 1: where your team saying you're you're looking for some good
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  Speaker 1: places to add to your positions. I can talk sectors,
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  Speaker 1: um Uh. Assumptions are the recessions aren't around the corner
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  Speaker 1: that you know, yields are going to interest rates are
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  Speaker 1: going to stay fairly but nine hike or two over
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  Speaker 1: the next six months, maybe two or three over the
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  Speaker 1: next year, we do look at we are looking at
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  Speaker 1: consumer discretionaries, We are looking at some of the technologies. Uh.
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  Speaker 1: You know, the transportation stocks have have been interesting. Uh.
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  Speaker 1: The energy stocks have not been an area that we've
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  Speaker 1: jumped into, primarily because it's it's been a matter of
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  Speaker 1: more of a want to wait and see to uh
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  Speaker 1: see if fifty price is a is a solid number.
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  Speaker 1: But when you start looking at what's attractive, it's still
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  Speaker 1: the consumer lead sectors in this market. And if you
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  Speaker 1: start looking at some of the politics, uh, healthcare becomes
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  Speaker 1: uh either interesting or suspect. Defense becomes either interesting or suspect.
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  Speaker 1: We just need to let some of the politics play out.
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  Speaker 1: You mentioned politics, and this way I'll need get to
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  Speaker 1: give you back ten seconds that what is the general
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  Speaker 1: zeitgeists coming from Texas from San Antonio. Well, I would
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  Speaker 1: say that it all the markets probably lead the way,
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  Speaker 1: and uh, the market's reaction to the the debates last
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  Speaker 1: night probably tells the story. All Right, I want to
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  Speaker 1: thank you very much, absolutely appreciate the time. Tom string Fellow,
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  Speaker 1: chief investment Officer for Investment Advisers, helping to manage more
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  Speaker 1: than eleven billion dollars based in San Antonio, Texas. We're
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  Speaker 1: gonna take you through to the close on Wall Street.
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  Speaker 1: That's next. This is Bloomberg