Are Defensive Equities Properly Represented in Your Client’s Portfolio?

When assembling an equity portfolio, context matters. Any number of equity funds and strategies may be good for an investor, but the real question is how they fit together.

We think Reaves can be a valuable complement to other strategies in a broad portfolio for a simple reason: We operate in niche pockets of the market many other portfolio managers seem to avoid. During a call in May of this year, hosted by Havener Capital Partners, for the benefit of investors, our president, John Bartlett, explained:

“I think it's pretty well documented that fund managers have … financial incentives to have a beta above one. It's really their best chance for outperforming. And so, obviously, low beta stocks don't really fit that bill. Utilities are complicated and they're not a huge part of the S&P 500. So, a lot of fund managers … feel willing to punt on the space. They're only about 2-3% of the total market cap of the S&P 500 … it's a place where because of its complexity, you really do have an opportunity and it's a place where value really matters…”

To hear more of John’s comments and learn about how Reaves strategies may complement the rest of your equity allocation, we invite you to listen to the full call. Please click graphic below to gain access to the call replay.

Disclosures:
Reaves Asset Management is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration does not imply any skill or training. Reaves is a privately held, independently owned “S” corporation organized under the laws of the State of Delaware.

The information provided in this blog does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed. Investors should consider the investment objective, risks, charges and expenses of all investments carefully before investing. Any projections, outlooks or estimates contained herein are forward looking statements based upon specific assumptions and should not be construed as indicative of any actual events that have occurred or may occur.

Beta measures a stock’s volatility relative to the broad market. A stock with a beta higher than 1.0 has historically been more volatile than the market, while a stock with a beta lower than 1.0 has been less volatile.

The S&P 500 Index (“S&P 500”) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The typical Reaves portfolio includes a significant percentage of assets that are also found in the S&P 500. However, Reaves’ portfolios are far less diversified, resulting in higher sector concentrations than found in the broad-based S&P 500.

Past results do not guarantee future performance. Further, the investment return and principal value of an investment will fluctuate; thus, investor’s equity, when liquidated, may be worth more or less than the original cost. This document provides only impersonal advice and/or statistical data and is not intended to meet objectives or suitability requirements of any specific individual or account.

All investments involve risk, including loss of principal.
All data is presented in U.S. dollars.
Cash is cash and cash equivalents.
An investor cannot invest directly in an index.
Important Tax Information: Reaves Asset Management and its employees are not in the business of providing tax or legal advice to taxpayers. Any such taxpayer should seek advice based on the taxpayer’s own individual circumstances from an independent tax adviser.
Fees: Net performance reflects the deduction of advisory fees which are described in detail in our Form ADV Part 2A.
Please contact your financial professional, or click the following links, for a copy of Reaves’ Form ADV Part 2A and Form CRS.
Additional information about Reaves may be found on our website: www.reavesam.com.
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