One on One with Henry Johnson, CEO of Fiduciary Trust
Monday, November 02, 2009
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SUSIE GHARIB: Our guest tonight says he's cautious when it comes to investing money for his clients. Joining us now, Henry Johnson, CEO of Fiduciary Trust, a big money management firm based here in New York. Henry, welcome to NIGHTLY BUSINESS REPORT.
HENRY JOHNSON, PRES. & CEO, FIDUCIARY TRUST: Thanks for having me.
GHARIB: Let me start off by just asking you your outlook on the market. You know investors see stocks are rallying and they see them selling off. There is a lot of confusion. What is your analysis of the next phase for the stock market?
JOHNSON: You know, we're still reasonably cautious. A lot of the news items that you lead with this evening, whether it's Ford and the question of how much demand has been pulled forward by government stimulus programs. But then the good news on housing and the consumer, we believe those are going to hold things in place here. But we're definitely cautious going in the next three to four months.
GHARIB: You told me earlier today that when we talked that you have in terms of your approach with client portfolios, the allocations something like half of them in stocks and the rest of it in cash and in a fixed income and bonds. Tell us more about your investment strategy.
JOHNSON: You know, we manage money for families -- taxable investors primarily here in the U.S. And our view is one as I said that is somewhat cautious. So we dampen some of our equity exposure really since the beginning of this year, pulling back from a typical 60 to 70 percent weight to more like 50. At the same time we've taken sort of a risk barbell approach, doubling our exposure to emerging markets. In the fixed income side of the equation, we are focused on asset quality and security selection, making sure that we are buying the right names for clients.
GHARIB: So on the equity side, where are you putting your investments, like what kinds of sectors?
JOHNSON: Well, it is really right here we have seen such an extraordinary rally since March. In the last couple of weeks, what we've been trying to do is pull back some of those names, take gains here. We're filling up positions in financials right now and in consumer discretionary but we are fairly close to a market weight. That is atypical for us and it is really a symptom of our being more defensive right now.
GHARIB: Can you give us any kind of idea of the sectors that you find attractive for your client portfolios where you are putting new money to work?
JOHNSON: As I mentioned sort of right now looking to sort of refill on financials. We've had a conservative weight there in which you have seen in some of the lower quality names really come through since the beginning of the year. We're trying to build solid positions and high quality financials, same thing in consumer discretionary. At the same time we're taking a little off the table in health care and information technology where we've seen such strong rallies.
GHARIB: What is your attitude about taking risks in this environment? I know you say you are cautious but are there, you know, under what circumstances do you feel like it's good to be a little more aggressive?
JOHNSON: There is no question there is enormous number of opportunities in a market with this much volatility. For us it is -- our chief investment officer has used an analogy recently of it's sort of like you are being in a greenhouse, that with the stimulus programs, with demand pulled forward as a result of them, with the housing and general consumer sentiment where they are, there's still so many questions about how much of that is upheld by the government. We don't yet have a sense of how we are going to do when we open the windows and the weather comes in. That said there are enormous opportunities since the beginning of the year. We've done very, very well in emerging markets, for example and in big cap U.S. names. Some of the highest quality names that were areas where defensive investors were fleeing in the beginning of the year, that is where we were already positioned and we've done well for clients as a result of it.
GHARIB: Just to wrap up our conversation, is there any advice that you would give to investors in our audience listening to this?
JOHNSON: Well look, the last two years have been a period of extraordinary education for all of us and I think the one piece of advice that we are saying to all of our clients is now is a time to really sit down. You've learned a lot about your risk tolerance, about the issues of liquidity and transparency. Now is a great time to sit down with your partners and be sure as you position yourself into the next year, that you are really ready to open the windows and let the air come in if you will.
GHARIB: OK, all right. Thank you so much for coming on our program. Hope to get you back again.
JOHNSON: It's been a pleasure, thanks, Susie.
GHARIB: My guest tonight, Henry Johnson, CEO of Fiduciary Trust.
