George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
Ferguson Wellman presents its mid-year investment outlook in partnership with the Portland and Puget Sound Business Journals. Originally aired July 13, 2022.
Ferguson Wellman Capital Management and West Bearing Investments were recently named by Portland Business Journal to their Oregon and S.W. Washington Money Management Firms list, ranked at fifth out of 44 companies.
Ferguson Wellman Capital Management and West Bearing Investments were recently named by Portland Business Journal to their Oregon and S.W. Washington Money Management Firms list, ranked at seven out of 50 companies.
The publication constructed the list by surveying over 50 money management firms and then ranked them according to assets under management in Oregon and S.W. Washington as of May 31, 2019. While Ferguson Wellman and West Bearing manage over $5.5 billion in total, the ranking was exclusively related to Oregon and S.W. Washington assets.
“Though it is flattering to be listed among the largest investment advisors in the region, more significantly, such occasions afford us the opportunity to humbly reflect on the privilege our clients have given us by entrusting us with the management of their assets,” said George Hosfield, CFA, director and chief investment officer.
Founded in 1975, Ferguson Wellman Capital Management is a privately-owned registered investment advisory firm, established in the Pacific Northwest. The firm manages over $5.5 billion for more than 830 clients that include individuals and families; Taft-Hartley and corporate retirement plans; and endowments and foundations with portfolios of $3 million or more. West Bearing Investments, a division of Ferguson Wellman, serves clients with assets starting at $750,000. (data as of June 30, 2019).
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Methodology and Disclosures:
Portland Business Journal produced their 2019 Oregon and S.W. Washington Money Management Firms list by ranking the companies according to Oregon and S.W. Washington assets under management. The research and ranking were gathered and distributed by Portland Business Journal. Ferguson Wellman and West Bearing (the firm) is not aware of any facts that would call into question the validity of the ranking. The firm does not believe this advertisement is inappropriate and is not aware of any unfavorable rating towards the firm. The rating category is money managers in Oregon and S.W. Washington, the number of firms given the opportunity to participate was 130, the number of respondents to the survey was 53 and the percentage of advisers that made the list was 94 percent. The rating is not representative of any one client’s experience and is not indicative of Ferguson Wellman’s future performance. Ferguson Wellman did not pay a fee to participate in this survey.
Matt Kish, banking and finance reporter for Portland Business Journal, spent some time with us in recent weeks to learn more about our fourth ownership transition process that began the end of 2017. We also had the opportunity to share with Matt that Ralph Cole, CFA, joined our board of directors this year. On June 30, Mark Kralj became director emeritus and we are delighted that he will continue to be involved with our firm for the next year until his retirement.
Mary Lago, CFP, CTFA, was honored at the Portland Business Journal’s annual Women of Influence award.
Ferguson Wellman Capital Management and its division, West Bearing Investments, are pleased to announce that the firm has been named by Portland Business Journal as top money managers in their 2017 Money Management Firms list.
Portland Business Journal ranked Ferguson Wellman fourth in Oregon and Southwest Washington on their list of 25 money managers. The listing was created by calculating the total number of assets under management for Oregon and Clark County, Washington clients as of May 31, 2017. Forty firms were originally surveyed.
“We are always glad to see our firm listed among our Oregon and SW Washington peers. It is a real testament to the hard work and dedication of everyone at Ferguson Wellman, but even more importantly to the wonderful clients we serve,” said Jim Rudd, principal and chief executive officer.
Founded in 1975, Ferguson Wellman Capital Management is a privately owned registered investment advisory firm, established in the Pacific Northwest. As of January 1, 2017, the firm manages over $4.5 billion for more than 760 clients that include individuals and families; Taft-Hartley and corporate retirement plans; and endowments and foundations with portfolios of $3 million or more. West Bearing Investments, a division of Ferguson Wellman, serves clients with assets starting at $750,000. (data as of January 1, 2017).
Disclosures: Portland Business Journal produced this list by soliciting firms in Oregon and Southwest Washington for information regarding their assets under management. Ferguson Wellman (the firm) is not aware of any facts that would call into question the validity of the ranking. The firm does not believe this advertisement is inappropriate and is not aware of any unfavorable rating towards the firm. The rating category is the Top 25 in the Financial Services Guide, forty firms were surveyed and 62.5 percentage of advisers polled received a ranking. The rating does not involve client experience and is not indicative of Ferguson Wellman’s future performance. Ferguson Wellman did not pay a fee to participate in this survey.
Ferguson Wellman Capital Management has been named by Portland Business Journal as a “Most Admired Company.” Of the 10 financial services companies listed in the top tier, Ferguson Wellman was ranked second. Over 127 companies received votes in the financial services category.
A cast iron mechanical bank is a fitting symbol for Ferguson Wellman Capital Management. The Portland investment firm, which this year is celebrating its 40th anniversary, manages more than $4.3 billion for 743 wealthy clients and is known for strength, solidity and an approach to investing that steers away from risk. Not surprisingly,
PORTLAND, Ore. – December 10, 2015 – Ferguson Wellman Capital Management is pleased to announce that the firm has been named by Portland Business Journal as a “Most Admired Company.” Of the 10 financial services companies listed in the top tier the firm was ranked third. This is the 11th consecutive year that the company has been selected. The list is compiled by surveying over 3,000 CEOs across the state of Oregon and southwest Washington. CEOs were asked to select three companies they most admired in eight industries, as well as three companies they most admired across all industries. Companies eligible for consideration were not limited to those based in Oregon and southwest Washington, but included any business with a substantial presence in the region.
“We are honored to have been selected, along with many other companies that we respect and admire throughout our region,” said Mark Kralj, principal.
Founded in 1975, Ferguson Wellman Capital Management is a privately owned registered investment advisory firm, established in the Pacific Northwest. As of 2015, the firm manages over $4 billion for more than 700 clients that include individuals and families; Taft-Hartley and corporate retirement plans; and endowments and foundations with portfolios of $3 million or more. West Bearing Investments, a division of Ferguson Wellman, serves clients with assets starting at $750,000.
(data as of January 1, 2015)
Oregon Bankers, Businesses Await Fallout from the Fed Rate Hike
by Andy Giegerich
Portland banking leaders have steadfastly agreed that the prospect of a higher federal funds rate, the figure set by the Federal Reserve by which other interest rates are set, won't affect commercial lending.
After the Fed pulled the trigger on a hike, it's now time to find out whether that'll remain true.
Linda Williams noted even with the hike, interest rates "are still low and attractive from a borrowing perspective.”
The Federal Reserve on Wednesday said it would raise the figure, and by extension short-term interest rates, by 0.25 percentage points. The rate will now range between 0.25 percent and 0.50 percent.
The Federal Reserve announced the decision Wednesday morning. The body had been expected to boost the rate in October.
"Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft," Fed officials said in a statement announcing the hike.
"A range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; some survey-based measures of longer-term inflation expectations have edged down."
The Federal Reserve hadn’t raised the benchmark interest rate for seven years, holding it near zero since 2008. Today's decision earned unanimous approval from the Fed, including an endorsement from Chair Janet Yellen.
Locally, at least one financial services firm reacted with a shrug.
"This was certainly the most talked about and anticipated Fed rate hike in history," wrote Ferguson Wellman Capital Management advisers. "As such, anticipated events become nonevents to the markets."
Specifically, the bond market was a bit lower while stocks were up 1.5 percent.
"The economy is robust enough that the Federal Reserve wants to 'tap the brakes' to keep the economy from overheating," the advisers wrote. "Ultimately, this rate hike should be interpreted as good news for the markets and economy."
We asked a few local bankers about the rate increase possibility in September.
“The anticipated interest rate increase hasn’t had an immediate effect on the Oregon middle market," said Ralph Hamm, Wells Fargo's commercial banking manager for Oregon.
"The common sentiment is that an increase is long overdue. A small interest rate uptick would send a positive message that our economy is improving, which is also supported by local signs of growth.”
Linda Williams, president of Washington Trust Bank's Oregon region, agreed.
"Commercial loan demand remains solid and financial institutions are actively competing for business," she said. "Any impact from interest rate increases will probably not occur until several interest rate increases have occurred. By historical standards, interest rates are still low and attractive from a borrowing perspective.”
However, Rick Roby, president and CEO of Premier Community Bank, fears that the boost could "raise the cost for businesses and could possibly cause a contraction of borrowing which over time will slow the economy. This type of environment creates more intense competition for acceptable credits."
Late last month, Dave Lofland, KeyBank's market president for Oregon and Southwest Washington, accurately predicted that the Fed wouldn't make any sharp hikes.
"For that reason, we don’t think any rate hike will be a serious impediment for the ability to borrow," he said.
"For many companies, their challenge isn’t the interest rate but what to do with their cash. The industrial side of the economy continues to struggle. It’s not pointing necessarily to a recession, but it’s made businesses more cautious. Many businesses have just struggled to deploy cash so they’re sitting with cash on the sidelines or capacity on their loans without industrial projects to go after."
Cover story: Dave Chen wants to make you money … and save the planet
by James Cronin
Eight years ago, Dave Chen and Tony Arnerich traveled to New York City. Their mission: to spread the gospel of sustainable investing to East Coast money managers, and maybe, raise some cash for their own sustainability-focused funds.
The response: crickets.
“The idea that you could actually generate market returns from doing positive things was a very foreign concept at the time,” Chen said, laughing. “I chuckle because Tony always refers to it as the time we put on priest-like garb to sermonize and try to convert.”
The silence, even after evangelizing to scores of their fellow money managers, didn’t deter Chen, who left a career in venture capital about that same time to found Equilibrium Capital.
Based in Portland, Equilibrium manages sustainability-focused, institutional-grade funds whose capital is directed at companies, products and initiatives that benefit the planet and create market-rate returns. Collectively, its team members have managed funds in excess of $25 billion and have built and led companies from the garage to their public offerings. Chen last year raised a $250 million fund focused on sustainable and organic agriculture which has already been deployed.
But Chen is hungry for more. He’s currently raising money for a similarly sized clean energy fund and has even bigger ambitions. Chen wants to propel impactful investing into the mainstream by pushing investors to use all the tools at their disposal to effect positive change in the world, or, as he says, to “use every instrument of investment to create an intentional benefit to the society and the environment.”
A lot needs to happen to make that vision a reality. Investments that fall under the sustainable and responsible umbrella, those that take environment, social and governance (ESG) factors into account, are still just a fraction of overall investments in the U.S.
But the category is growing, up 76 percent since 2012, and there are signs the numbers will continue to rise. There’s greater acceptance that climate change is a real threat, and millennials and women, who often seek investments with a societal benefit, are changing the conversation. Plus, significantly, the federal government just last month removed a major roadblock to social impact investing.
As interest in impactful investing increases, Chen is well positioned to be its champion. He is a respected investor, money manager and mentor, who has imparted his knowledge to thousands of business school students.
“We all worry about population growth and the effects of industrialization on the earth,” said Arnerich, founder and CEO of the investment advisory firm Arnerich Massena. “Dave is deploying capital to leave the world in a better place than it is right now.”
Michael Bergmann, the former director of footwear sustainability at Nike has four kids, all millennials, all very conscious of social and environmental issues. They played a big part in pushing Bergmann, of Portland, to transfer his entire 401(k) — more than $1 million — into socially and environmentally responsible investing.
“There’s a finite number of resources out there, and for companies to take a stand to protect those resources while they’re innovating, it makes me feel good about where I’m putting my money,” he said.
Bergmann is part of a growing group of individuals and institutions focused on social impact investing, putting their money behind companies that employ sustainable and socially responsible business practices. That can mean everything from banning investment in companies that extract fossil fuels to directing capital toward clean energy innovators or companies with a triple bottom line focus.
For now, though, Bergmann is in the minority. Of the $36.8 trillion in total managed assets tracked by Cerulli Associates, a Boston-based global asset management analytics firm, $6.57 trillion, or 18 percent, qualifies as socially focused investments.
Chen said part of the problem is that socially responsible investing is too narrowly defined. Arnerich agrees, saying it is often conflated with political activism or partisan politics. The nomenclature — socially responsible investing, green investing, investing with a conscience — only reinforces that. For some, especially old-guard investors, those phrases smack of liberalism, granola and drum-circle-loving hippies and as a result, they have avoided such investments altogether.
“The history of the genre, the ideas of green or social investing, has probably done more harm than good because it’s become political,” Arnerich said. “It’s left or right. All those words are unfortunately too polarizing.”
Chen himself shuns such terms. He sees sustainability as a value creator in portfolios, crafting each of his strategies “to be intentionally impactful,” Chen said. “We believe that sustainable practices are the drivers of returns.”
Another roadblock to Chen’s form of investing: Money managers say there are no sector-wide standards. Each company that runs a fund has its own socially responsible screening criteria for investing in companies, said Ralph Cole, an executive vice president with Ferguson Wellman Capital Management, one of Portland’s largest wealth management firms with $4.3 billion in total assets managed. Impact investing accounts for just 2 percent of Ferguson’s overall business, and the firm has only acquired that business in the last year or two.
That meager percentage isn’t a huge surprise. When it comes to managing people’s money, return on investment is still the number one consideration for a majority of individuals and money managers. Social impact investing is a relatively new category of investing and as such there’s not a lot of data on which to base projected returns.
What’s more, ESG funds “really don’t exist” in emerging markets like Brazil, Russia and China, said Ferguson Wellman equity trading associate Peter Jones, which can make social impact investing a challenge.
“Corporate governance is hard to measure, and really doesn’t exist ... for investors with exposure to those countries,” Jones said. “[Emerging markets] are not as interested in good corporate governance, and they are a lot less transparent.”
The time is now
Even with the obstacles, Chen is convinced that impactful investing is primed to take off.
For one, growing concern about climate change is affecting how money managers view long-term investments. If a company uses sustainable practices, for example, money managers may value it more highly than one that does not.
“If we shift to renewables from coal, if we realize water is a critical asset, those that use water more efficiently will have very positive opportunities, not just risks,” Chen said.
The influx of environmentally and socially conscious millennials and a growing number of women into the investing pool is also brightening the outlook for impact investing. Those groups, he said, tend to take a longer-view approach to managing their money, asking questions about how assets will be “utilized and productive over long periods of time.”
That longer horizon is evident in Arnerich’s approach. Arnerich Massena has $25 billion under management and about $400 to $500 million invested for social impact. Instead of focusing on the more touchy-feely aspects of impact investing, his firm invests in assets “that sustain life,” like agriculture and organic products.
“We moved to focusing on what the world needs and away from the sustainability buzz, and it now means more to clients,” Arnerich said. “Investing in agriculture or organic products, that resonates with people. That’s what millennials are driving — what they put in their and their children’s mouths.”
The most dramatic lift to impact investing of late was delivered by the U.S Department of Labor, which recently made it easier for retirement fund managers to consider ESG factors when directing capital.
In 2008, the DOL, whose interpretations of the Employee Retirement Income Security Act, known as ERISA, guide managers of pension and health plan assets, released guidelines that essentially blackballed socially responsible investing. In late October, the department reversed course and acknowledged that ESG factors can have a direct impact on the economic value of a plan’s investment. The decision effectively greenlights social impact investing for fund managers overseeing billions in assets.
“That’s pretty damn powerful,” Chen said.
In a sign of impact investing’s growing acceptance, the Oregon Environmental Council (OEC) last year completed moving its $750,000 endowment into investment vehicles that consider environment, social and governance factors. Now, the state’s oldest environmental organization is considering shifting its retirement plan so employees will have ESG investing options as well.
“You need to know your returns will match the market while investing in your values,” said OEC spokesperson Jessica Moskovitz. “But ensuring your future, the future of your kids ... that is not just about money.”
As for Chen, his $250 million agriculture fund is invested in a range of projects, including large-scale agriculture operations throughout the Willamette Valley, where his farms grow hazelnuts and blueberries. He is also focused on his “Australian pastoral strategy,” which includes investments in large-scale, grass-fed rangelands for cattle and sheep.
With that fund still investing, Chen at the end of March, filed a new securities offering, again for $250 million. This fund will invest in bio-processing facilities that convert farm and dairy waste, like methane, into fuel for transportation or to sell through power purchase agreements.
“Every strategy we execute here has sustainability at its core,” Chen said of his firm. “It’s not part of what we do, it’s not a piece of what we do. It’s all we do.”
Even as he’s fundraising, Chen is working to influence the next generation of financiers.
Chen spent three years teaching sustainable finance at Stanford’s Graduate School of Business. Today, he teaches impact and sustainable finance at the Kellogg School of Management at Northwestern University.
Six years ago he founded what’s now called the Sustainable Investing Challenge, which invites finance students from business schools around the world to create investment strategies that deliver both a societal and capital return. Last year, 60 business schools sent teams to the event, which was held in London.
All told, Chen has spread his vision for sustainable investment to thousands of students from across the globe.
As those students enter the workforce and connect with investors like former Nike executive Bergmann, who align their values and investments, Chen believes socially responsible investing will find its way into the mainstream.
“The idea of a social [benefit] being executed in financial markets is not new. The idea that financial structures themselves unlock value is not new,” Chen said. “I think that by putting that together with intentionality, wanting to actually use these vehicles to create an environmental and social benefit, that is an innovation.”
Oregon stocks stumble as market plunges
by Matthew Kish
The stocks of 18 of Oregon's 20 biggest public companies dropped Monday as the stock market tumbled. The S&P 500, Dow Jones industrial average and the Nasdaq Composite each closed down nearly 4 percent.
Northwest Pipe Co. (NASDAQ: NWPX) and Lattice Semiconductor Corp. (NASDAQ: LSCC) were the only large Oregon stocks to post gains. Each ended the day up less than 1 percent.
While there's no consensus on the market stumble, local analysts pointed to weakness in the Chinese economy and uncertainty about central banks and interest rates.
"I would venture to guess it’s more people being skittish about the direction of the Fed right now," said Chris Abbruzzese, chief investment officer for Portland's Rain Capital Management. "The Federal Reserve is going to be less supportive of equities markets going forward.”
They also said the market was due to hit a speed bump.
"The markets had been unusually stable and had come up quite a bit over the past three years," said Kraig Kerr, a senior vice president and financial adviser at D.A. Davidson in Portland. "So most people were expecting a correction at some point and were surprised it hadn’t happened earlier."
Shawn Narancich, executive vice president of equity research and portfolio management at Ferguson Wellman Capital Management, said the firm doesn't see anything "sinister" happening.
"Our mantra continues to be keep calm and carry on," Narancich said.
Ferguson Wellman expects the U.S. economy to continue growing in the second half. The economy is adding jobs and inflation is low. Consumer spending, which accounts for roughly 66 percent of the economy, remains strong.
"Gas prices are going to start dropping," he said. "Unemployment is low. Disposable incomes are up."
Rain Capital’s Abbruzzese said there’s also “quite a bit of evidence” that “we’re due, if not overdue,” for a resurgence in spending on capital projects that would stimulate the economy.
Kerr said D.A. Davidson's advice for clients depends on circumstances.
"Clients that are going to need cash in the near term may want to consider locking in gains," he said. "For the most part if a client has a well balanced portfolio we're not doing anything."
Abbruzzese said Monday's market volatility highlights the need for investment strategies that minimize risk.
“This is the type of market where we really thrive,” he said. “The approach thrives because we are more mindful of risk factors in portfolio construction.”
Here's a look at how Oregon's biggest stocks fared:
Nike Inc. (NYSE: NKE) — down 2.81 percent to $103.87
Precision Castparts Corp. (NYSE: PCP) — down 1.95 percent to $228.85
Lithia Motors Inc. (NYSE: LAD) — down 2.82 percent to $101.89
StanCorp Financial Group Inc. (NYSE: SFG) — down 0.85 percent to $112.59
Schnitzel Steel Industries Inc. (NASDAQ: SCHN) — down 2.66 percent to $16.10.
Ferguson Wellman Capital Management is pleased to announce that the firm has been named by Portland Business Journal as a top money management firm in their 2015 Wealth Management and Financial Services Guide publication. Portland Business Journal ranked Ferguson Wellman second in Oregon and Southwest Washington on their list of 25 money management companies. The listing was created by calculating the total number of assets under management for Oregon and Clark County, Washington clients as of the second quarter of 2015.
“We are delighted to be honored by the Business Journal. However, what is of utmost importance to us is the trust our clients place in our firm. That means more than any award or ranking ever could,” said Jim Rudd, chief executive officer.
Ferguson Wellman Capital Management builds and manages customized investment portfolios of $3 million or more for individuals, families, foundations, endowments and corporate retirement plans. With a majority of the investment portfolios comprising individual securities, Ferguson Wellman’s team of in-house analysts make decisions regarding asset allocation, sector weights and security selection directly for our clients.
Founded in 1975, Ferguson Wellman is a privately owned registered investment advisor headquartered in the Pacific Northwest. With more than 640 clients in 36 states, the firm manages $4.2 billion. Ferguson Wellman also serves individuals and institutions through West Bearing Investments, a division that manages portfolios with investments of $750,000 or more. (data as of 6/30/15)
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Mary Faulkner, senior vice president of branding and communications, was honored by Portland Business Journal as a 2015 Woman of Influence Orchid Award Winner.
PORTLAND, Ore. – September 23, 2014 – Ferguson Wellman Capital Management has been named by the Portland Business Journal as a leader in corporate philanthropy in Oregon and southwest Washington. Ferguson Wellman was ranked eighth in the medium-sized companies category at the Business Journal’s annual Corporate Philanthropy Awards luncheon. Company submission to the process included number of employees, amount of dollars contributed and number of volunteer hours completed in 2013.
“This is an honor and recognition shared by everyone in our firm. It is gratifying to join other like-minded companies that make this city a better place to live and work,” said Jim Rudd, principal and chief executive officer.
Founded in 1975, Ferguson Wellman Capital Management is a privately owned registered investment advisor, headquartered in the Pacific Northwest. With more than 670 clients in 35 states, the firm manages $4.1 billion. Ferguson Wellman also serves individuals and institutions through West Bearing Investments, a division that manages portfolios with investments of $750,000 or more. (data as of 6/30/14)
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Brad Houle, CFA, executive vice president of research, recently authored a by-line article that was included in the Portland Business Journal’s 2014 Wealth Management and Financial Services Guide. This publication is sponsored annually by the CFA Society of Portland.
In the article, Houle states, “While bonds do not offer a compelling value at this point, they are a necessary component of many portfolios for both individual and institutional investors.” Houle is a member of Ferguson Wellman’s fixed income team and manages the firm’s REIT investment strategy.
Click here to read “A yield austerity; how not to get burned in the bond market.”
