We’re pleased to announce that Chevy Chase Trust has been named to Barron’s 2025 Top 100 RIA Firms list — a prestigious recognition we’ve consistently earned since 2019. The Barron’s Advisor’s ranking considers both quantitative and qualitative measures – such as assets managed, growth, technology spending, size, shape and diversity of the team and compliance records. We know that our success is a direct result of the trust our clients place in us and the dedication of our exceptional team.
Click here to read more about this year’s rankings.
Barron’s rankings were awarded on September 15, 2025 for data as of June 30, 2025. Chevy Chase Trust paid no application fee to participate.
Chevy Chase Trust is proud to share thatDeb Gandy, Senior Managing Director, has been named one ofNorthern Virginia Magazine’s 2025 Top Financial Professionals.
This recognition highlights Deb’s expertise, dedication, and the trust she’s earned from clients and peers alike. We celebrate her leadership and commitment to delivering thoughtful, client-focused financial strategies.
Northern Virginia Magazine’s 2025 Top Financial Professionals were awarded on 5/8/2025, based on the reader survey conducted from 3/10/2025 through 3/31/2025. No fees were paid to participate.
The recently passed One Big Beautiful Bill Act (OBBBA) includes changes to the charitable contribution deduction. Beginning January 1, 2026, taxpayers will be subject to a new floor on the charitable deduction and a cap on their total itemized deductions. There is therefore a short window between now and December 31st to take another look at your charitable goals to maximize the benefits of your donations prior to the changes in the law.
Floor on Charitable Contributions
After 2025, the itemized deduction for charitable contributions will be subject to a reduction equal to 0.5% of a taxpayer’s Adjusted Gross Income (AGI). This floor is applicable to all levels of AGI, all filing statuses, all charitable contribution amounts, and is in addition to the existing caps on charitable contributions (more on the caps a bit later).
For example, in 2026, a taxpayer with AGI of $1,000,000 will have $5,000 ($1,000,000 * .005) subtracted from their charitable deduction. If the individual donates $300,000 to charity, the taxpayer’s deduction will be reduced to $295,000. Since the floor is determined by the taxpayer’s AGI and is regardless of the amount contributed, this taxpayer will have the same $5,000 reduction whether the donation is for $10,000, $300,000 or any other amount.
Cap on Total Itemized Deductions
The OBBBA also caps the tax benefit of total itemized deductions for taxpayers subject to the 37% tax bracket. This cap effectively limits the benefit of itemized deductions to a maximum 35% tax rate. After 2025, total itemized deductions for taxpayers in the 37% bracket will be reduced by 2/37 of the lesser of (a) the taxpayer’s total itemized deductions, or (b) the excess of taxable income plus total itemized deductions over the 37% bracket threshold. The 37% bracket amount for 2025 starts at taxable income of $626,351 for single and head of household filers or $751,601 for married taxpayers filing jointly. The threshold amounts are adjusted for inflation each year and are expected to increase for 2026.
For example, in 2026, assume married taxpayers have a combined AGI of $1,000,000, a charitable contribution deduction of $295,000 (for their donation of $300,000) and a $10,000 deduction for State and local taxes, for total itemized deductions of $305,000. The preliminary taxable income is $695,000 ($1,000,000 – $305,000). Using the threshold amounts for 2025, the taxpayers’ itemized deductions would be reduced by $13,427, which represents the lesser of (a) ($305,000 * 2/37) = $16,486 or (b) ($695,000 + $305,000 – $751,600) * 2/37) = $13,427. Total itemized deductions are therefore reduced from $305,000 to $291,573.
Changes to the Ordering of AGI Limits on Charitable Contributions
The OBBBA also changes the order in which the AGI limits are calculated for charitable contributions made after 2025. As general background, the following limits are applied to donations of distinct types of property to certain types of charitable organizations.
Currently, the deduction for cash contributions subject to the highest 60% AGI limit is calculated first; the 50% limitation deduction is calculated second and so forth. The new law reverses this ordering after 2025 so that the deduction for charitable contributions subject to the 20% AGI limit is calculated first and the 60% AGI limitation is calculated last. In addition, in 2026, the new charitable floor amount is subtracted from the charitable contributions of the lowest order calculation before determining the AGI limitation.
Any charitable contribution exceeding the applicable AGI limitation, plus any floor amount subtracted from the deductible portion of the contribution, may be carried forward and deducted, subject to the same limitations, for up to the following five years. If contributions do not exceed the AGI limitations, the floor amount is subtracted in the year the contributions are made.
Combined Impact
Combining the previous examples that illustrate the impact of the floor and the AGI limits on charitable contributions as well as the cap on itemized deductions, assume married taxpayers with an AGI of $1,000,000 in 2026 intend to donate cash of $100,000 to public charities and $200,000 of Nvidia stock held long-term to their Donor Advised Fund (DAF). For this example, also assume they can deduct $10,000 of State and local taxes.
The charitable deduction floor amount is $5,000 ($1,000,000 * .005), which reduces the deductible amount of the appreciated stock donation to $195,000 ($200,000 – $5,000). The 30% AGI limit applicable to the appreciated stock contribution is $300,000 ($1,000,000 * 30%). Therefore, $195,000 of the stock contribution is deductible. Next, the cash contribution AGI limitation is $405,000 ($1,000,000 * 60% = $600,000 – the $195,000 stock contribution deduction), so that the entire $100,000 cash contribution is also deductible.
Finally, the itemized deduction cap reduces the total itemized deduction from $305,000 ($295,000 charitable + $10,000 state and local taxes) to $291,573 ($305,000 – $13,427). The total combined reduction in the itemized deductions of $18,427 ($310,000 – $291,573) is lost forever and may have been avoided by accelerating the charitable contributions into 2025 before the effective date of the change in the law.
Using Appreciated, Concentrated Stock Holdings to Achieve Charitable Giving Goals
While a higher AGI limit applies to cash contributions, there is generally an overriding benefit in donating appreciated, publicly traded securities, at least up to the 30% AGI limit for such donations. Donating appreciated securities provides a deduction equal to the fair market value of the stock, avoids taxes on the unrealized capital gain, and reduces a concentration risk in the security. Giving appreciated securities can also preserve your cash for future distributions, expenses, portfolio rebalancing, or other uses.
We recommend that any taxpayer who makes charitable gifts consider using a highly appreciated security such as Nvidia for the donation, particularly if the security has become a concentrated position in the taxpayer’s portfolio. If this is done before the end of 2025, the deduction will not be subject to the 0.5% AGI reduction or the cap on total itemized deductions discussed above.
To illustrate, using a simple example, assume a taxpayer with $1,000,000 of AGI desires to give $300,000 to their DAF in 2025. This donation can then be doled out to charities from the DAF over time. The taxpayer compares donating $300,000 cash to donating $300,000 of Nvidia stock with a cost basis of $10,000. The taxpayer’s combined ordinary income tax rate (federal and state) is 45%. The taxpayer’s combined capital gains tax rate (federal and state) is 30%. Here is the comparison:
Cash donation of $300,000
Value of the tax deduction: $135,000 ($300,000 * 45%)
Net “cost” to the taxpayer: $165,000 ($300,000 – $135,000)
Stock donation of $300,000
Value of the tax deduction: $135,000 ($300,000 * 45%)
Value of the capital gains tax savings: $87,000 (($300,000 – $10,000) * 30%)
Net “cost” to the taxpayer: $78,000 ($300,000 – $135,000 – $87,000)
If stock concentration were not an issue, the taxpayer could use the available cash to buy back the same stock that was donated to charity, with a new tax basis equal to the fair market value of the stock on the date of purchase.
Limited Charitable Deduction for Non-Itemizers
Taxpayers who claim the standard deduction on their tax returns may deduct claim a charitable deduction of up to $2,000 for married taxpayers filing jointly or up to $1,000 for all other taxpayers.
Other Factors to Consider When Making Charitable Giving Decisions after OBBBA
The calculation of the charitable contribution deduction is complex. Factors such as your AGI, non-charitable itemized deductions, state income taxes, the assets you have available to donate, the type of charities you want to support, and your estimated income can all impact your potential tax deduction. The ability of taxpayers who have reached the age of 70-½ to make Qualified Charitable Donations of up to $108,000 (2025 amount) from their IRAs has not been impacted by the new deduction limits and should not be overlooked. A bunching strategy (making larger charitable donations in one year while claiming the standard deduction in other years) should also be considered when the charitable floor and cap limits are substantial.
Collaboration with your financial planner, portfolio manager, tax advisor, and sometimes legal counsel is even more important today when making decisions and executing your charitable giving goals. We recommend you ask your tax advisor to run the numbers to help determine the best strategy for you in any given year.
[1] Qualified conservation contributions of real property to a qualified organization, including a governmental unit and public charities, are limited to 50% of AGI (100% for qualified farmers and ranchers). Disallowed qualified conservation deductions can be carried forward for 15 years.
[2] Non-cash property is property other than cash or capital gain property and includes donations such as clothing, household items, electronics, food items, inventory, works of art, capital assets held one year or less, and capital assets for which the taxpayer elects to deduct the cost basis.
[3] Capital gain property is property that would result in long-term capital gain if it were sold at its Fair Market Value on the date it was contributed.
IRS CIRCULAR 230 DISCLOSURE
Pursuant to IRS Regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
LEGAL, INVESTMENT & TAX NOTICE
The information contained in this presentation is of a general nature and does not consider the circumstances of any particular recipient. This information is
not intended to be and should not be treated as legal advice, investment advice, or tax advice and is for informational purposes only. Recipients should not under any circumstances rely upon this information as a substitute for obtaining specific legal or tax advice from their own counsel. All information discussed herein is intended to be current only as of the date of publication.
Tune in to CNBC’s #HalftimeReport at 12 p.m. ET today to hear our Chief Investment Officer, Amy Raskin, share her perspective on the latest financial market news.
We’re proud to congratulate Deb Gandy, Senior Managing Director and Wealth Advisor at Chevy Chase Trust, on being named a 2025 Women in Leadership Awards honoree by Virginia Business magazine.
This prestigious award celebrates women executives for their professional achievements, civic engagement, mentorship, leadership and breaking glass ceilings. Deb joins an exceptional group of honorees who are making meaningful contributions to their organizations and communities, while inspiring the next generation of women in leadership.
Deb will be recognized in the October issue of Virginia Business and featured online at VirginiaBusiness.com. The award was announced in July 2025 based on lifetime achievement and will be presented at a ceremony on October 6, 2025.
Chevy Chase Trust submitted an application fee to participate.
The signing of the federal budget bill into law on July 4th creates new planning opportunities and considerations. Please read our summary of the planning implications of the One Big Beautiful Bill Act of 2025.
Chevy Chase Trust’s unique approach to Thematic Investing weaves together multiple themes across sectors, geographies, and industries, each designed to capitalize on research-driven insights. Listen to our quarterly update of economic conditions and investment strategy.
Everything we do starts with a conversation. Understanding your unique story is key in the development of a plan with your best interests in mind. To connect with us to learn more and begin a conversation, visit chevychasetrust.com.
Important Disclosures This commentary is for informational purposes only. The information set forth herein is of a general nature and does not address the circumstances of any particular individual or entity. You should not construe any information herein as legal, tax, investment, financial or other advice. Nothing contained herein constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments. This commentary includes forward-looking statements, and actual results could differ materially from the views expressed. Materials referenced that were published by outside sources are included for informational purposes only. These sources contain facts and statistics quoted that appear to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. Fact and circumstances may be materially different between the time of publication and the present time. Clients with different investment objectives, allocation targets, tax considerations, brokers, account sizes, historical basis in the applicable securities or other considerations will typically be subject to differing investment allocation decisions, including the timing of purchases and sales of specific securities, all of which cause clients to achieve different investment returns. Past performance is not indicative of future results, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable, equal any historical performance level(s), be suitable for the portfolio or individual situation of any particular client, or otherwise prove successful. Investing involves risks, including the risk of loss of principal. The level of risk in a client’s portfolio will correspond to the risks of the underlying securities or other assets, which may decrease, sometimes rapidly or unpredictably, due to real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues, armed conflict, trade disputes, sanctions or other government actions, or other general market conditions or factors. Actively managed portfolios are subject to management risk, which involves the chance that security selection or focus on securities in a particular style, market sector or group of companies will cause a portfolio to incur losses or underperform relative to benchmarks or other portfolios with similar investment objectives. Foreign investing involves special risks, including the potential for greater volatility and political, economic and currency risks. Please refer to Chevy Chase Trust’s Form ADV Part 2 Brochure, a copy of which is available upon request, for a more detailed description of the risks associated with Chevy Chase Trust’s investment strategy. The recipient assumes sole responsibility of evaluating the merits and risks associated with the use of any information herein before making any decisions based on such information.
“There are decades where nothing happens, and weeks when decades happen,” Vladimir Lenin famously said. The first half of 2025 seems like the latter: a brief period in which decades of transformative change occurred. U.S. equity markets appear optimistic that these changes will not hurt companies’ ability to generate ever higher profit margins. We have our doubts and believe that a more balanced, discerning investment approach is more important now than ever.
REPEATED SHOCKS YET ALL-TIME HIGHS
If one looked only at the S&P 500’s beginning and ending levels, one might conclude that not much happened in the first half of 2025. The Index opened on January 2 at 5,903 and closed on June 30 at 6,205, generating a 6.2% total return over six months. Similarly, 10-year U.S. Treasury yields started the year at 4.54% and finished slightly lower, at 4.23%. The similarity of the endpoints, however, masks ample volatility, triggered by three largely unrelated shocks.
Chinese tech rivalry: In January, news of a Chinese artificial intelligence (“AI”) model named DeepSeek caused a sharp fall in high-flying tech stocks, such as Nvidia. DeepSeek’s technical capabilities and significantly lower production cost led many observers to conclude that U.S. dominance in technology is nearing an end.
Sky-high tariffs: On “Liberation Day” (April 2), the U.S. announced that it was imposing tariffs ranging from 10% to 50% on roughly 200 trading partners, claiming that unfair terms of trade had hurt U.S. manufacturing. The S&P 500 fell over 12% in justfour trading Investors feared that this abrupt reversal of the long trend toward tariff-free trade and global integration of manufacturing would slow economic growth and raise inflation.
War: On June 13, Israel bombed several military and political targets in Iran, claiming Iran was close to producing a nuclear Just nine days later, the U.S. bombed three Iranian nuclear facilities. Oil prices spiked over 15% in June on investor fears that the war would keep Iran’s 3.3 million barrels of daily oil production from the global market.
U.S. equity markets snapped back after each shock. Fear of the U.S. losing its dominance in tech subsided as four tech giants (Alphabet, Microsoft, Meta and Amazon) increased capital spending and reiterated their optimistic projections for AI. Fear of tariffs evaporated when, just a week after “Liberation Day,” the U.S. announced it would pause implementation for at least 90 days. It took just a few hours for fear of war to subside, as equity investors recalled that armed conflict usually stimulates economic growth and equity performance.
These market snap backs reinforced the “buy the dip” mentality that has driven equity investors for most of the past decade. After falling almost 20% from February 19 to April 8, it took only 55 trading days for the S&P 500 to set a new all-time high. Never before has the S&P rebounded from a decline of over 15% to an all-time high in a shorter period of time. Investors appear to have jumped right back to an all-in bet that AI-driven productivity gains will fuel continued declines in inflation and solid earnings growth.Consensus expectations call for two interest rate cuts in the second half of 2025 and strong earnings growth of almost 7%. While not impossible, this scenario is not probable in our view. The recent rebound leaves U.S. equity market valuations near their all-time high and “over-owned,” particularly by U.S. households.
Investors in U.S. fixed income and currency markets appear notably less sanguine. The yield on 10-Year U.S. Treasuries rose and the U.S. dollar fell during the April equity market selloff. That is highly unusual. In every crisis-driven equity market drop for the past 50 years, global investors flocked to the safety of U.S. Treasuries and the U.S. dollar, which drove yields lower and lifted the dollar’s value versus other currencies. The fact that the opposite occurred during this crisis may prove to be a significant turning point in the U.S.’s role in global financial markets. Only time will tell.
WHAT IF GLOBALIZATION REVERSES?
Global integration had been underway for many decades when it began to speed up in the early 1990s. First, after the Berlin Wall fell, capital began pouring out of the West in search of opportunities in Eastern Europe, Asia and other emerging markets. Then, in 2001, China joined the World Trade Organization, setting off a surge in global trade that deepened the integration of manufacturing and supply chains. Companies relocated production to regions where labor and other inputs (including energy) were available at lower cost, and they could sell to local consumers. Global trade continued to grow meaningfully as a share of GDP until the Global Financial Crisis of 2008-2009. Since then, it has bounced around that peak level.
Globalization has its advocates and its critics, but deepening economic integration over decades has led to two undeniable trends in the world economy:
Developing economies, most notably China, experienced a dramatic rise in per capita GDP, due to rapid export growth, sustained capital inflows and rising productivity, and
The prices of globally traded goods fell significantly relative to prices of other goods, bringing down overall inflation. Consequently, interest rates in high-income countries fell steadily in both real and nominal terms.
The largest beneficiaries of these trends were Chinese labor, U.S. multinationals and global owners of capital (investors). The biggest losers were factory workers in the developed world. Since 1990, over 800 million people in China have been lifted out of extreme poverty. Western businesses and U.S. multinationals also reaped massive gains. Moving production offshore boosted corporate profit margins and eroded labor’s bargaining power, allowing the business sector to take a larger share of national income.
Real wages for American workers have lagged behind output per worker, and wages as a share of GDP have dropped steadily since the late 1980s. At the same time, corporate profit margins have expanded to an unprecedented level.
Expanding profit margins encouraged massive inflows of foreign capital into U.S. financial markets, which both reduced the cost of capital for U.S. companies relative to their foreign peers and lifted U.S. asset values.
All else being equal, declining global integration will lead to:
Higher prices for goods,
Higher interest rates,
Higher wages, and
Lower corporate profit margins.
Few economists will argue that the net economic benefit of tariffs and other trade barriers is positive. However, several non-economic rationales, including national security, may justify trade barriers in certain sectors.
If the Trump Administration ultimately succeeds in imposing higher U.S. tariffs, and thereby reduces U.S. consumption of imports, foreign countries can choose one of two paths: either produce fewer goods or consume more. If too many countries opt to produce less, a global recession would likely ensue. If enough opt to consume more, the global economy will likely become more balanced and grow faster, but with a greater share of the growth generated outside the U.S.
Both Europe and China appear to be choosing to encourage greater consumption. Both regions have increased fiscal stimulus and lowered interest rates. In the short term, reduced U.S. demand for imports would create excess manufacturing capacity and likely spur non-U.S. suppliers to lower prices, reducing inflation abroad. Longer term, other nations choosing to run their economies “hot” will likely lead to higher inflation everywhere, less efficient supply chains and greater demand for commodities and infrastructure.
THEMATIC UPDATE
Equity investors may be starting to discount this possibility. Markets outside the U.S. outperformed the S&P 500 in the first half of 2025. The MSCI All Country World ex USA Index generated a total return of 17.9% year-to-date. We continue to see attractive investment opportunities in both our End of Disinflationary Tailwinds and Opportunities Abound Abroad themes.
We are actively adjusting the emphasis in our Heterogeneous Computing theme. To date, it has focused primarily on semiconductors and technology hardware and equipment stocks, many of which greatly benefited from the AI-related capital spending boom. We are shifting our focus towards software, services and applications that are well-positioned to capitalize on the infrastructure spending that has already occurred.
While we believe that AI has great long-term potential, we worry that the market is overly optimistic about its short-term impact. For example, The Carlyle Group estimates that more than $1.8 trillion will be spent on AI infrastructure by the end of the decade. But according to Coatue, another global investment firm, the combined sales of AI services are projected to be less than $20 billion in 2025. Even if AI service revenue doubles every year for the next five years, the aggregate revenue generated over those years would cover only about 70% of the projected capital spending. Few would consider that to be an acceptable rate of return. As companies and investors stare at this possibility, we expect the rapid growth in AI-related capital spending to level off in the quarters ahead.
We are phasing out our Post-Pandemic Consumer theme. While work-from-home and other lifestyle changes ushered in by the pandemic are likely to persist, we think these trends are now reflected in current valuations.
We believe global markets are still digesting the long-term implications of the policy changes and geopolitical events of the past six months. The magnitude of these changes suggests the reverberations will be significant, but unfold over years, not months or weeks. We remain intensely focused on our deep Thematic research. We are actively working on a new theme that we may introduce to portfolios in the second half of this year if our research substantiates some of our initial hypotheses. More generally, we continue to position portfolios relatively conservatively and look abroad for new opportunities. We are grateful for our clients’ continued support in this endeavor.
Important Disclosures This commentary is for informational purposes only. The information set forth herein is of a general nature and does not address the circumstances of any particular individual or entity. You should not construe any information herein as legal, tax, investment, financial or other advice. Nothing contained herein constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments. This commentary includes forward-looking statements, and actual results could differ materially from the views expressed. Materials referenced that were published by outside sources are included for informational purposes only. These sources contain facts and statistics quoted that appear to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. Fact and circumstances may be materially different between the time of publication and the present time. Clients with different investment objectives, allocation targets, tax considerations, brokers, account sizes, historical basis in the applicable securities or other considerations will typically be subject to differing investment allocation decisions, including the timing of purchases and sales of specific securities, all of which cause clients to achieve different investment returns. Past performance is not indicative of future results, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable, equal any historical performance level(s), be suitable for the portfolio or individual situation of any particular client, or otherwise prove successful. Investing involves risks, including the risk of loss of principal. The level of risk in a client’s portfolio will correspond to the risks of the underlying securities or other assets, which may decrease, sometimes rapidly or unpredictably, due to real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues, armed conflict, trade disputes, sanctions or other government actions, or other general market conditions or factors. Actively managed portfolios are subject to management risk, which involves the chance that security selection or focus on securities in a particular style, market sector or group of companies will cause a portfolio to incur losses or underperform relative to benchmarks or other portfolios with similar investment objectives. Foreign investing involves special risks, including the potential for greater volatility and political, economic and currency risks. Please refer to Chevy Chase Trust’s Form ADV Part 2 Brochure, a copy of which is available upon request, for a more detailed description of the risks associated with Chevy Chase Trust’s investment strategy. The recipient assumes sole responsibility of evaluating the merits and risks associated with the use of any information herein before making any decisions based on such information.
How the Advent of Molecular Medicine Exemplifies the Power of Thematic Investing
In this interview, Thematic Research Analyst Garrett Collier explains how the theme demonstrates Chevy Chase Trust’s long-term, cross-sector approach to investing.
What is the Advent of Molecular Medicine, and why has it been such a long-standing theme for Chevy Chase Trust?
At its core, the Advent of Molecular Medicine is about using genomic sequencing to better understand human disease and develop more precise, targeted treatments. It’s one of our oldest themes because the underlying science continues to evolve and create new investment opportunities. Over time, it’s created what we call a flywheel effect. More sequencing drives better understanding of disease, which drives better diagnostics and therapies, which drives even more sequencing. This cycle continues to generate meaningful investment opportunities.
How does this theme reflect CCT’s Global Thematic Investing approach?
Molecular Medicine illustrates the way we think across sectors. The theme began with genomic sequencing and the companies making the machines that enabled this work. But as the science evolved, so did the opportunities, from diagnostics to drug development to advanced computing. It’s a great example of how following a single theme over time can lead to investments that span healthcare, technology and beyond. This cross-sector lens is a defining part of how we invest.
What sets your investment process apart when tracking themes like Molecular Medicine?
We’re not just reacting to headlines — we’re immersed in the science and in direct dialogue with the companies doing the work. We follow the evolution of a theme over time, which positions us to find opportunities early. A lot of our work is about thinking several steps ahead. For example, if genomic sequencing is taking off, what tools and infrastructure are going to be critical to support it? What technologies enable better and cheaper sequencing and what companies will benefit from these improvements? This long-term, fundamentals-driven perspective helps us identify promising companies early.
What role does rigorous research play in managing risk within this theme?
While innovation in healthcare is often exciting, not all of it is investable. We always ask fundamental questions: Is there a market for this? Is there a real business model behind the innovation? You can have the most exciting tech, but if it’s too costly to implement, it’s not going to work as an investment. So, it’s about marrying optimism on innovation with disciplined analysis — a sober approach that’s grounded in fundamental research. And by digging deep, we can separate the promising technologies from the interesting ideas that may not be investable.
How does your team identify cross-sector connections and translate them into investable ideas?
Themes like Molecular Medicine often generate ripple effects. As we dive deep, we sometimes uncover adjacent opportunities. For example, once you understand how critical data analysis is to genomic science, you start asking what technologies enable that. We started hearing researchers say they needed Graphics Processing Unit (GPU) technology — not Central Processing Unit (CPU) technology — to process the vast quantities of genomic data and realized that demand for high-performance computing would extend far beyond health care. That led us to invest in companies making GPUs well before ChatGPT became a common topic at the dinner table. It’s a textbook example of how following one theme closely can reveal opportunities in entirely different industries – an approach that is central to our thematic strategy.
You mentioned earlier the “Flywheel Effect” you see in Molecular Medicine. Can you share a specific example of this in action?
One example is cancer screening and detection using blood tests that detect tumor DNA. If you’ve been treated for cancer, these non-invasive tests can help detect recurrence by simply analyzing your blood. That’s possible from years of advancements in genomic research. And the more these tests are used, the more data they generate, which improves future diagnostic tests and drives further demand for sequencing.
How has the Molecular Medicine theme evolved since its inception?
It started with research-driven demand — sequencing DNA to understand it better. Then came targeted therapies, like gene and cell therapies. Some of those have been slower to play out, but others have led to real breakthroughs. Now we’re seeing widespread clinical applications — tumor profiling, noninvasive prenatal testing, early disease detection. What began as a research tool is now part of everyday patient care, helping to improve and save lives.
What are the most exciting emerging applications of Molecular Medicine you’re tracking right now?
AI is a transformative force in Molecular Medicine. DNA has billions of data points, and AI can help identify correlations humans might miss. That’s valuable in drug discovery and diagnostics. Companies that build massive data sets can harness the insights of improving AI models to differentiate themselves from competitors. As AI models require more data, sequencing demand should continue to grow, creating tailwinds to drive the theme forward.
Why Fixed Income Investing Might Be Right for You Today
In this interview, Fixed Income Portfolio Manager Carlton Davis explains how adding fixed income to your investment portfolio can help you weather market volatility.
What is fixed income investing, and what role does it play in wealth management?
Fixed income investing seeks to deliver predictable income while preserving capital. At its core, it’s a loan — a bond — to an entity where an investor provides capital in exchange for regular interest payments. Common examples include municipal bonds, corporate bonds, U.S. Treasury securities and asset-backed securities. Fixed income investments can provide stability and income, helping to smooth out the volatility of riskier markets.
What opportunities do you see in fixed income in the near future?
In the current environment, I believe the fixed income market is poised to deliver attractive returns relative to the broad equity market. Yields are currently at levels not seen since the great financial crisis. I believe it’s unlikely we’ll see yields return to the ultra-low levels of the past decade, which creates an opportunity for higher returns in the future. Starting yields are a strong predictor of fixed income total returns.
Credit spreads, the additional yield pickup for a corporate bond versus a Treasury bond, have generally moved tighter over the past several years, but the current environment has investors revaluating the trend. Real yields (current treasury yield – expected inflation) have reached levels not seen since before the Great Financial Crisis (2008-2009), providing investors with income well above the rate of inflation. There is also a divergence in global monetary and fiscal policy that may alter asset-class valuations. These factors have led to dislocations in the bond market and provide opportunities for active managers. We are moving into a period where investors should be rewarded for identifying relative value across sectors and individual credits.
Why is fixed income investing such an important tool in uncertain economic times?
It comes down to peace of mind. Fixed income typically offers lower returns than equities — but also significantly lower volatility. That means predictable income when markets are choppy. Even though bond prices can fluctuate day to day, our signature buy-and-hold strategy allows us to focus on the income being generated, not the change in market value due to interest rate volatility. That’s a huge advantage in uncertain economic times — clients can rely on their bonds to mature at par and avoid selling at depressed prices as they might experience with a bond fund or ETF.
Why does Chevy Chase Trust use individual bonds in its portfolios?
Many individual investors buy Bond Funds or ETFs to get broad exposure to fixed income, but we see several drawbacks to this approach.
Funds or ETFs, while a proxy for the market, do not have a predictable income stream and have no set maturity date or value. Ownership of funds or ETFs may include additional layers of management fees, and the passive approach is exposed to impacts from fund flows and trading decisions. This defeats the purpose of most fixed income strategies.
We believe individual bonds — not bond funds or ETFs — are the best fit for investors. With individual bonds, clients know exactly what they own, when the bonds mature and what income will be generated going forward. This clarity is incredibly useful for planning and managing expenses. Plus, individual bonds are more tax efficient, allowing you to better manage capital gains taxes. We focus on both taxable and tax-exempt bonds and tailor each portfolio to the client’s needs.
How does Chevy Chase Trust’s approach to fixed income differ from other firms?
Our approach combines a focus on the macroeconomic landscape with fundamental knowledge of bond issuer credit and market dynamics. This allows us to build portfolios based on where we believe the economy and interest rates are headed. We aim to add value to portfolios, not simply take the market return.
We are not a broker-dealer. We do not hold an inventory of bonds that we then sell to our own clients. This allows us to be nimble and focused on where we see value. We buy and sell bonds at institutional prices from a variety of sources, and our clients own bonds at the price we paid, with no markups. We’re always looking for the best ideas for our clients. When a client wants to understand why they own a specific bond, they can connect directly with the portfolio manager responsible for the decision.
Is fixed income investing only for older investors?
Not at all. While many older investors own bonds because of the lower risk profile, anyone seeking stability, income or lower volatility can benefit. For example, a younger investor who is risk averse or heavily invested in riskier assets may want to offset that volatility with a more predictable, stable investment. Fixed income investing is an exercise in risk management and serves as an attractive asset-liability matching tool. The common thread among fixed income investors is the desire for predictable income and lower volatility — not age or wealth.
What’s the biggest misperception about fixed income?
That it’s boring. In reality, it’s one of the more complex and technical markets. Bonds don’t trade on exchanges the way equities do — we have to source and negotiate every trade. It’s about the strategy, the research and the hunt. Every day we’re digging into economic policy, company and municipality fundamentals and market technicals. It’s incredibly intricate and intellectually rewarding.
Why were you drawn to fixed income investing?
Fixed income forces you to be curious — to constantly learn and understand what’s under the hood. It’s a highly technical, ever-evolving market that keeps me coming back for more. One day I’m looking at new issue corporate bonds, the next day I’m conducting macroeconomic research on updated Federal Reserve policy. I have learned something new every day for the past 15 years and I will continue to learn something new every day for the next 40 years. That’s what I like the most.
How CCT’s Boutique Status, Personalized Approach Builds Trust with Clients
In this interview, Senior Managing Director and Head of Business Development Marc Wishkoff shares insights into the firm’s commitment to comprehensive wealth management solutions.
How would you describe the Wealth Advisor/Relationship Manager role at Chevy Chase Trust?
At Chevy Chase Trust, relationship managers play a dual role. Our team serves as both advisors and coordinators. We draw on a team of specialists with deep expertise in investments, estate and financial planning, and trust matters. Our job involves understanding clients’ needs, identifying potential issues and bringing in the right specialists to create personalized solutions. This often involves coordinating with both internal teams and external partners, such as accountants or attorneys, to keep everyone on the same page and focused on solving the client’s objectives and goals.
What sets Chevy Chase Trust apart from other firms?
Chevy Chase Trust is truly a unique provider in a crowded industry. We offer national firm expertise in a boutique size, with a transparent investment philosophy and the ability to speak directly to the decision-makers managing your portfolio. We are intentionally not built for scale — a distinctive model that helps us maintain a focus on our clients’ objectives over everything else. As a pioneer in thematic investing, our philosophy, process and portfolios stand out in an increasingly homogenous industry.
Can you tell me more about your unique model?
Because we are privately owned and operated, we have the freedom to ignore the constraints of institutionalized money management and self-serving products. This unbiased approach allows us to provide truly client-centric advice. We’re also boutique in size and nature, and we offer the same level of service for all clients, regardless of how much they invest with us. With decisions made in-house and no bureaucratic layers, we can act quickly to address client needs. Our clients and colleagues avoid dealing with distant departments and resources to solve needs or obtain solutions. Instead, my colleagues and I can walk down the hall to get answers or bring the right team member on board. This streamlined structure helps us stay focused on delivering personalized, high-quality service.
Why do you believe your clients value this approach?
It comes down to trust. Our team is committed to putting clients’ interests first, guided by our fiduciary principles and a dedication to transparent communication. We serve as a trusted advisor our clients can call for any financial matter, even if it’s outside our direct purview. Additionally, clients appreciate knowing their investments are in expert hands, allowing them to focus on their lives. Whether it is financial planning, investment management or personalized attention, we adapt to meet each client’s unique needs.
What are your clients getting that they cannot find at larger institutions?
Our boutique structure and private ownership allow us to concentrate on long-term client objectives instead of quarterly company profits. We are able to allocate resources to handle client matters so that the timing aligns with their financial goals. We also heavily invest in our business and prioritize attracting and retaining experienced talent. In fact, our investment team comprising 21 members boasts an average of 21 years of industry experience. Over the past three years, we have also grown our firm’s employee base by almost 30%1, adding several relationship managers to ensure our clients receive the high-touch service they deserve. This investment in our team ensures that every client receives personalized attention, helping our firm maintain a more than 97% client retention rate2.
As the industry shifts toward passive investing and outsourcing, we remain active managers and differentiate ourselves by partnering directly with clients on their unique goals, leveraging our disciplined process and unwavering focus on long-term, stable growth.
Our approach seeks opportunities across asset classes and around the globe. Perhaps our single most important distinction is this: At Chevy Chase Trust, we invest in global themes. We build equity portfolios of companies positioned to exploit powerful, secular trends, disruptive ideas, innovations, and economic forces.
The smartest investment strategies are informed by sound financial planning. Our clients appreciate an integrated approach and the difference it can make. Explore the difference in our financial planning, thematic investing, risk management and fixed income strategies.
Sometimes the greatest returns come from investing in people.
We’ve created a culture that values service over products, long-term goals over short term quotas, and your success over anything else. Our team of 90 professionals is comprised of CFAs , MBAs, CFPs® and other specialists in global research, thematic investing and planning.
