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

tenths of one percent. Down in US reels off on eight points, a gain of seven tenths of one percent, Gold down thirty to thirteen twenty six or drop of one percent, and crude oil West Texas Intermediate down three point two percent forty four forty seven for barrel of dot I I'm Charlie Pallett, and that's a Bloomberg Business Flash. Thank you very much, Charlie Pellett. It's time now for

the et F Report. It's brought you buy withim Smith and Brown CPA's audit, tax and advisory service, helping you end your business to be in a position of straight. Ain't experienced the WITHYM way by visiting with him dot Com. That's go to Catherine Calgary for the et F Report. When it comes to income inequality, there's someone in the financial world who has helped in a subtle way. He's Jack Bogel, the founder of the multi trillion dollar investment

firm Vanguard Group. Bloomberg intelligence analyist Eric Beltunist estimates that Damgard has directly saved investors at least five hundred billion dollars by charging lower fees that would otherwise have gone to Wall Street investment firms. On Bloomberg TV, Bogel put that savings even higher. So if you put some kind of a return on the money that we save investors each year and look at it over twenty years or so,

you find out a huge, staggering number. Whether a trion is the right number, a treeion and a half, I wouldn't know. But it's big, very big, and it's good for the investor. That's the important thing. Bogel has been nominated for the Presidential Medal of Freedom Beltunist his impact

on the financial industry mind blowing. In addition to launching the S and p FI founded index fund for retail investors, Vocal Structured Vanguard in such a way that as the company makes a profit, it goes to lower fees benefiting it's fund investors. That's your Bloomberg et F report. I'm Katherine Calderie. You're listening to Taking Stock with Pinn Fox and Kathleen Hayes on Bloomberg Radio. What's hurting the markets? Can consumers drive it fast enough to attempt the feed

into another interest rate increase? And is there a new debt bubble? We've heard some FETE officials worry allowed about that. And above all, what does this all mean for your investments? Were very happy to welcome to the show now. Tom Stringfeld, chief investment officer at Frost Investment Advisors with eleven point one billion dollars of assets under management across all asset classes, including the firm's five star rated fund f A t r X, based in San Antonio in New York City today.

So Tom, thanks for stoff by. Appreciate it very much. So tell us a little bit more about Frost Investment Advisors UM and your your five star rated fund. We'll do. Frost is a Texas BACE company, Our parent is Frost Bank. Our investment advisor was fun out of the Wealth Advisor Group back in two thousand and eight, and Uh, at that point in time, we were at about four billion. We've since grown to eleven billion. We've launched a number

of mutual funds, some institutionals, some retail class. Uh. You mentioned one of the funds that's our fixed income total return. We have both an institutional class and a investor class. Toss a little bit about your investment strategy and the themes that you see playing out absolutely the there's a number of strategies. We run traditional equity, we run traditional fixed income. The equity is a value and growth MidCap bent on the fixed income. It's credit. It's a total return,

which is an intermediate and low duration. Those are are primary funds. We also have ascid allocations strategies. So the clients that we have worked with over the years tend to run the we'll call the traditional institutional, traditional high net worth clients. So you know, we're very cognizant of

the macro events driving the market. Um. You know, those tend to be the the most impactful on traditional investing, both on the fixed income side and the equity sign so on the on the private wealth management side, how has your business been affected by the big downturn and energy in you know, Texas. I know Texas is more diversified than it used to be. Nevertheless, still a pretty

big deal. And I would think there's a lot of a lot of people who are wealthy in Texas or are they Are they in a different position than they weren't As it aff at your business, I would the answers, yes, the the impaire As you mentioned, Texas is a lot more diversified, and I can tell you the impact to our our base customer on our investment side was relatively

unchanged this time around. You know, it speaks to the diversification of the of this of the state, and i'd say the diversification of our of our investment client base. As you know, Surprisingly, as the old prices were tanking, we talked a lot about what the impact would be to the consumer ultimately, which was going to be a little bit more money in their pocket, whether they used it to pay off debt or they used it to

save you know, Eventually that started to resonate. I think we eventually saw it actually taking place with our consumers and and you know, consumer health started improving. So the impact was definitely felt in certain parts of the state prone to energy. You know, West Texas, South Texas are great examples, but overall for most of the state, you know, we saw unemployment head south, but you still saw a

fairly stable economy, a fairly stable economy. Is it too early do you think for people to start buying and inchy assets. I'll tell you I've heard a number of industry we'll call them experts here recently talking about the time is still now that all prices are attractive moving into the fifty dollar barrel range. The problem with a number of the experts is, I don't know anybody that's actually gotten all prices right over any period of time. When it's all fit and done, All prices are going

to depend on the emotions of the market. So tell me about your bond strategy right now, because we have one story on the Bloomberg today about this very very narrow range that treasury bonds, sovereign bonds are locked into. And of course there's the bank in Japan that wants to steepen the yield curve. There's big of being that started buying corporate bonds ECBs open that I got the

doorp into buying more bonds as well. You've got very low yield, You've got a debate over how much yields are going to It seems to me, what do you do just to stick in the shortest term bonds possible for a while? Now a lot of this gonna be answered A lot better buy out of our fixed income. I'll give you the the overview. The total return fund, which I'll tell you a few years ago was around two hundred million. Now it's pushing two billion actively managed.

And what that means is the team can move up and down the duration spread by plus minus three to the intermediate. So what that does allow them to do is manage an intermediate like strategy with the duration of around three what's minus today and in a fairly attractive yield. I want to say it's it's somewhere in the three and three quarters for sent range today. But it is a group that it's not afraid of stepping into assetbacks

when it's time, treasuries when it's time. But what you are seeing is a little more defensive strategy in anticipation of that inevitable hike. You know it's inevitable. We've were missing the timing at this point. We've recently spoken about the new SMP industry group for the Real Estate Investment

Trust used to be part of financials. Comes about that specific industry and whether you think that big investors are going to have to own a piece of this and that could help the stocks just because you've got to own something. I don't disagree. Uh, Given it was a major slice of the financials. Given it is a new sector, I think by definition you're going to see the passive moving into it. You're going to see large institutional managers moving into it. It becomes a self fulfilling prophecy at

that point in time. So I'm actually kind of positive and I find it interesting. You know, it's the real estate sector has had a nice run. I don't think for those reasons that run is over again. So in equities, where do you see the most value? Where? Where your where your team saying you're you're looking for some good places to add to your positions. I can talk sectors,

um Uh. Assumptions are the recessions aren't around the corner that you know, yields are going to interest rates are going to stay fairly but nine hike or two over the next six months, maybe two or three over the next year, we do look at we are looking at consumer discretionaries, We are looking at some of the technologies. Uh.

You know, the transportation stocks have have been interesting. Uh. The energy stocks have not been an area that we've jumped into, primarily because it's it's been a matter of more of a want to wait and see to uh see if fifty price is a is a solid number. But when you start looking at what's attractive, it's still the consumer lead sectors in this market. And if you start looking at some of the politics, uh, healthcare becomes

uh either interesting or suspect. Defense becomes either interesting or suspect. We just need to let some of the politics play out. You mentioned politics, and this way I'll need get to give you back ten seconds that what is the general zeitgeists coming from Texas from San Antonio. Well, I would say that it all the markets probably lead the way, and uh, the market's reaction to the the debates last night probably tells the story. All Right, I want to

thank you very much, absolutely appreciate the time. Tom string Fellow, chief investment Officer for Investment Advisers, helping to manage more than eleven billion dollars based in San Antonio, Texas. We're gonna take you through to the close on Wall Street. That's next. This is Bloomberg