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Comments on Silicon Valley Bank and General Banking Industry Concerns

While still developing, we want to assure you that the SIA Investment Committee is closely monitoring the story of Silicon Valley Bank (“SIVB”) and the related ripple effects across the banking system in recent days.

First and foremost, we did not have any direct exposure to SIVB in any of our discretionary portfolios. While SIVB is a constituent of the S&P 500, it accounted for roughly 0.19% of the index prior to its decline and was not held in the top 100 holdings of any mutual funds or ETFs held in our discretionary models. Furthermore, we are in close contact with our investment partners across asset classes to gauge any auxiliary exposure. Thus far, we have not uncovered any direct exposure or material banking relationships.

Broadly speaking, the banking sector is facing headwinds driven by the Federal Reserve’s hawkish position and subsequent hiking cycle that began in 2022, but the magnitude of decline experienced by SIVB is highly concentrated to themselves due to poor cash management. For the banking sector as a whole, a persisting inverted yield curve has led to compressed margins and reduced business activity, which has a higher degree of impact on small and regional banks that have more concentrated business models.

As previously communicated, we believe that interest rate risk is largely behind us with recession risk in the forefront. During these times, a greater degree of volatility and dispersion across sectors is expected in which we are proactively managing around. Our focus is to take a thoughtful approach that prioritizes conviction and diversification.

We take great pride in your trust in us as responsible stewards of your capital. Please reach out to your advisor if you have any questions or concerns.

The information contained herein is for informational purposes only and should not be considered investment advice or a recommendation to buy, hold, or sell any types of securities. Financial markets are volatile and all types of investment vehicles, including “low-risk” strategies, involve investment risk, including the potential loss of principal. Past performance does not guarantee future results. For details on the professional designations displayed herein, including descriptions, minimum requirements, and ongoing education requirements, please visit Signature Investment Advisors, LLC (“SIA”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Securities offered through Royal Alliance Associates, Inc. member FINRA/SIPC. Investment advisory services offered through SIA. SIA is a subsidiary of SEIA, LLC, 2121 Avenue of the Stars, Suite 1600, Los Angeles, CA 90067, 310-712-2323, and its investment advisory services are offered independent of Royal Alliance Associates, Inc. Royal Alliance Associates, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Royal Alliance Associates, Inc.