Archive for investments

Fourth Quarter Investment Commentary

Looking Back: 2017 Market Review

The fourth quarter capped yet another stellar year for U.S. stocks. Larger-cap U.S. stocks (Vanguard 500 Index) gained 6.6% for the quarter and ended the year with a 21.7% total return. This was the ninth consecutive year of positive returns for the index. The market’s 1.1% gain in December crowned 2017 as the first year ever that stocks rose in each and every month. The broad driver of the market’s rise for the year was rebounding corporate earnings growth, supported by solid economic data, synchronized global growth, still-quiescent inflation, and accommodative monetary policy. U.S. stocks got an additional catalyst in the fourth quarter with the passage of the Republican tax plan, presumably reflecting investors’ optimism about its potential to further boost corporate after-tax profits, at least over the shorter term.

Foreign stock returns were even stronger, with developed international markets gaining 26.4% (Vanguard FTSE Developed Markets ETF) and emerging markets up 31.5% for the year (Vanguard FTSE Emerging Markets ETF). In the fourth quarter, however, these markets couldn’t match the S&P 500, gaining 4%–6%.

Moving on to bonds, the core bond index fund (Vanguard Total Bond Market Index) gained 3.5% in 2017. This return was close to the index’s yield at the start of the year, as intermediate-term interest rates changed little during the year with the benchmark 10-year Treasury yield ending at 2.4%. Although the Federal Reserve raised short-term rates three times (75 basis points total), yields at the long end of the Treasury curve declined and the yield curve flattened. Corporate bonds across all credit qualities and maturities had positive returns. High-yield bonds gained 7.5% (ICE BofA Merrill Lynch U.S. High Yield Cash Pay Index) and floating-rate loans rose 4.1% for the year (S&P/LSTA Leveraged Loan Index). Investment-grade municipal bonds (Vanguard Intermediate-Term Tax-Exempt) rebounded from a flat 2016, returning 4.5%.

Click Here to read full brief

Monthly Market Brief-August

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief August 2017 for updates.

Here are some key highlights:


  • Non-farm payrolls added 209,000 jobs in July, bringing this year’s monthly average additions to 170,000 which is well above the minimum 100,000 needed to absorb new entrants
  • Second quarter GDP came in at an annualized growth of 2.6% for one of the best postings in 2 years
  • Business investment posted a strong increase of 5.2% in 2Q17, driven by a sharp increase in equipment investment of 8.2%
  • Factory payrolls have come alive with unfilled orders jumping to a two-year high, increased shipments rising to a five-year high, and new orders standing at a three-year high


  • With unemployment at 4.3%, average hourly earnings should theoretically be trending higher rather than remaining at a flat 2.5%
  • Given the relatively flat wage trend, consumer spending has been trending lower over the last three months with an average growth of 0.16%, near a cycle low

Heritage Institutional- December Retirement Report 2016

Each month, our Heritage Institutional team publishes the Retirement Report, which provides timely news and updates for plan sponsors and fiduciaries of defined contribution plans.  This month’s topics include:

  • Getting the Biggest Bang for Your Buck!- Negotiating Retirement Plan Fees with Your Provider
  • Changes in Employees Demographics May Impact Owner’s Percentage of Retirement Plan Contributions
  • Index Funds- Passive or Passive Aggressive?
  • Allowable Plan Expenses: Can the Plan Pay?

To read the full report, click here.

Monthly Market Brief- December

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief December 2016 for the December 2016 update.

Here are some key highlights:


o Consumer confidence jumped 6.6% in November to a cycle high not seen since July 2007
o Manufacturing enjoyed a nice post-election bounce with the ISM manufacturing index up 1.3 points to 53.2 and the U.S. MarkitManufacturing PMI increasing to a more-than-expected 53.9
o Short-term stabilization of oil prices was recently achieved as OPEC reached an agreement to cut oil production for the first time since 2008
o Trending in-line with the 2016 non-farm payroll average of 180,000, a respectable 178,000 jobs were added in November


oWage growth remains a disappointing component within U.S. jobs, accelerating only 2.5% year-over-year
oThe recent improvement in the unemployment rate from 4.9% to 4.6% was largely driven by a contraction in the labor force participation rate

Heritage Institutional- November Retirement Report 2016

Each month, our Heritage Institutional team publishes the Retirement Report, which provides timely news and updates for plan sponsors and fiduciaries of defined contribution plans.  This month’s topics include:

  • The Scorecard- A Former Portfolio Manager’s Perspective
  • Waiver of 60-Day Rollover Requirement
  • What to Expect When Transitioning Providers
  • The Importance of Qualitative Review

To read the full report, click here.

Heritage Institutional — September Retirement Report

Each month, our Heritage Institutional team publishes the Retirement Report, which provides timely news and updates for plan sponsors and fiduciaries of defined contribution plans.  This month’s topics include:

Q & A – Department of Labor defined “fiduciary” and helps you understand the regulations and how they pertain to you, your plan and participants.

Participant Behaviors — OneAmerica® providing insights in order to improve financial wellness.

Organizing Your Fiduciary File — Prepare your file in four key sections to keep everything organized.

Allowable Plan Expenses: Can the Plan Pay? — The payment of expenses by an ERISA plan (401K) defined benefit plan, money purchases plan, etc.) out of plan assets is subject to ERISA”s fiduciary rule.

To read the full report, click here.


Heritage June Book Pick: Going Broke

Looking for an intellectually-stimulating beach read this summer? Nothing like a cold splash of the hard truth on a hot summer’s day. If you have read this book, we’d love to hear your thoughts in comments!

Going Broke: Why Americans Can’t Hold On To Their Money by Stuart Vyse

About the book (from the publisher):

51MRdAGQRQL._SX326_BO1,204,203,200_Over the last three decades, debt, bankruptcy, and home foreclosures have risen to epidemic levels. To make matters worse, the personal savings rate is at its lowest point since the Great Depression. Why, in the richest nation on earth, can’t Americans hold on to our money?

Winner of the prestigious William James Book Award for Believing in Magic and an authority on irrational behavior, Stuart Vyse offers a unique psychological perspective on the financial behavior of the many Americans today who find they cannot make ends meet, illuminating the causes of our wildly self-destructive spending habits. But unlike other authors, he doesn’t entirely blame the victim. Bringing together fascinating studies of consumer behavior, he argues that the mountain of debt burying so many of us is the inevitable byproduct of America’s turbo-charged economy and, in particular, of social and technological trends that undermine our self-control. Going Broke illuminates everything from the rise of the credit card, to the increase in state lotteries and casino gambling, to the expansion of new shopping opportunities provided by toll-free numbers, home shopping networks, big-box stores, and the Internet, revealing how vast changes in American society over the last 30 years have greatly complicated our relationship with money. Vyse concludes both with personal advice for the individual who wants to achieve greater financial stability and with pointed recommendations for economic and social change that will help promote the financial health of all Americans.
Engagingly written, with startling insights into modern consumerism and with poignant human-interest stories of people facing financial failure, Going Broke offers a provocative new perspective on American economic behavior that is likely to stir controversy and serious debate.

Generational Management

by Kevin Karpe, Heritage Trust

Kevin KarpeWhen I was 25 years old and new to the business, I served as a trustee for a 90 year-old Holocaust survivor. That experience not only changed my view of what it means to administer trusts, but helped shape my view of the world. She asked that we get together on a weekly basis to talk about her investments, but when I’d come to see her, I would have two bottles of wine with me. One to drink, one to last her through the week. She explained so much more to me than I would have ever been able to explain to her. Twenty-five years and a couple of generations later, I’m still administering a family trust and repeating those stories the grandmother entrusted to her family.

As relationship managers, we take our duty very seriously. There’s more to managing a relationship than can be contained in the four corners of a document. We take time to get to know our clients very closely. It’s our obligation to understand the expectations of a grantor while recognizing the needs and aspirations of the beneficiaries. In a nutshell, we spend our days transferring wealth, as well as values, to the next generation.

My enjoyment comes from working with families, often over multiple generations. A relationship with a family can be short and simple, like administering an estate over the span of a few months, or last for decades, like managing a trust for grandchildren.

We ask our clients, “What legacy do they want to leave?” Not necessarily spending or budgeting or asset management, but what are your values and what values do you want pass on?

A common mistake clients can make is drafting a trust document and then not readdressing the overall plan when there’s a big life event such as a divorce, a child graduates from college or reaches a certain age. Those are all good opportunities to readdress your intent and adjust accordingly.

When it comes to selecting a fiduciary to work with, I think it’s important to look at the following things: Experience. Independence. Rapport. Clients need to have confidence in the institution as a whole and look at their history.

As a relationship manager, I look forward to the unique life stories and legacies each client brings and figuring out how we can do our part to pass on that legacy.

Kevin Karpe is senior vice president, relationship management, for Heritage Trust.  You can read more about Kevin here and contact him anytime at

Professional Perspectives: Dynasty Trust 101

By:  Scott Sewell, attorney and shareholder McAfee & Taft in Oklahoma City

This article was originally posted in Spring of  2010


Scott Sewell

Since joining McAfee & Taft A Professional Corporation in 1982, I have been assisting individuals and families with careful planning for the management and disposition of their assets. One of the most powerful tools available to these individuals and families is the dynasty trust. Properly structured, a dynasty trust can keep an individual’s assets from being included in his or her estate, so the assets can pass estate tax-free from one generation to another.

A dynasty trust is designed to hold assets in trust without direct ownership being transferred to any beneficiary (i.e., your children, grandchildren, great-grandchildren, etc.). The value of the dynasty trust is that the trust’s assets are available to provide for the health, education, maintenance and support of each and every one of your descendants. Then, for example, when a child dies, the remaining trust assets will pass to individual trusts for each of that child’s children. This pattern can go on repeatedly through the generations as allowed by state law. As long as the dynasty trust does not allow too much access by the beneficiaries, the trust’s assets are not regarded by the IRS as being “owned” by the beneficiaries and are therefore not subject to estate tax in their estates when they die. This presents a marvelous opportunity for the trust’s assets to grow for future generations because any appreciation in those assets is also exempt from estate taxes. An additional benefit to the dynasty trust is that, because the trust’s assets do not belong to any of the beneficiaries, the assets are generally protected from creditors of the beneficiaries in the event of lawsuits and divorce.

One particularly important aspect in the creation of a dynasty trust is the selection of a trustee. A corporate trustee is often the best choice because an individual will not live long enough to carry out the trust’s provisions. In addition to longevity, a corporate trustee offers the following advantages:

  • It is a specialist in handling trusts and has investment and tax expertise.
  • It is impartial — free of emotional bias and conflicts of interest with the beneficiaries.

When considering the implementation of a dynasty trust into an estate plan, the key questions to ask are (1) Do you want your assets to be protected from future divorces and lawsuits your children may face and (2) Do you want your assets to be able to grow and pass federal estate tax free from your children to grandchildren? If the answer to either question is “yes,” then you should consider a dynasty trust as a part of your estate plan. Transferring wealth to future generations without the assets becoming subject to the claims of ex-spouses, creditors or the IRS is the way that dynasties have been created in the past and the way in which dynasties can be created in the future.

Scott Sewell’s practice is principally focused on the representation of individuals, families and business owners in the areas of strategic estate planning involving wealth preservation and transfer, estate and trust administration, and business succession.