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INVESTMENT COMMENTARY

The sustainability of the recent stock market recovery looks tenuous given the many economic and market risks. We continue to face rising COVID-19 cases around the world, while the timing and availability of a vaccine remain uncertain. In addition, rising tensions between the U.S. and China, trade disputes between the U.S. and E.U., and the November election outcome all pose further risks to our economic system.

Due to these uncertainties, we will tread cautiously and remain defensive until risks and rewards seem more in balance. We are positioned in high-quality, large-cap stocks that should weather the uncertainty of the next year. For our clients in balanced accounts, given declining rates, we have deployed some cash and Treasury funds into a more diverse portfolio.  

Our defensive stock positioning, which helped in the first quarter, had the opposite effect in the second quarter. Given the strong recovery we saw in the stock market, Zevin Asset Management’s portfolios that have a mix of equities and fixed-income assets underperformed. However, on the equity side, we had solid stock selection across several sectors and our bias to the largest companies and domestic stocks drove our equity performance. Stock selection was strongest in Emerging Markets and weakest in Europe. A few of our ecommerce companies benefited from the shut-down of physical stores and social distancing. Our underweight in the Financials and Utilities sectors continued to benefit performance this quarter while our underweight in the Consumer Discretionary sector was a drag. Looking forward, we believe better opportunities may exist in international and the more cyclical sectors, hence we are increasing our research effort in these areas. 

For a more in-depth discussion of our thoughts on the second quarter, listen to this audiocast.

PERFORMANCE OVERVIEW

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