Category Archives: Company News

Volatility, the New Normal?

Volatility, the New Normal?

Whether you’re watching the bond market or domestic US equities, 2018 has presented more volatility than we have seen in recent years.  This can cause investors to question strategy and be tempted to “play” the volatility or move to the sidelines.

The yield on the 10-year US Treasury rose 45 basis points in 2018 to a short-term high in February before pulling back to the 2.80% mark.  Moreover, in the last thirty days we have witnessed numerous three percent or greater shifts in this part of the yield curve both upward and down.  As one would expect, the equity market has not been dissimilar, experiencing even larger percentage swings.  After a correction of greater than 10% in early February, domestic equities spent the next five days recovering or essentially bouncing off this short-term low.  Over the last month more than half of the trading days have seen a change in closing price on the S&P 500 Index in excess of 1%, either up or down.  If we were to look at the change in intraday high/low, that percentage of trading days would be considerably higher.

Suffice it to say we have been experiencing some volatility.  What does that mean and what should you do about it?  For insurers, we recommend keeping the long-term perspective.  If you’re already investing in equities, it could be prudent to take advantage of larger market corrections by “averaging into” your holdings.  This will help lead to outperformance over time.  If you’re considering investing in equity for the first time or the first time in a while, keep in mind the surplus volatility marked to market assets such as common stocks present.  Again, long-term perspective is key.  We recommend determining how much surplus volatility due to equity each insurer is willing to tolerate then backing into an appropriate equity allocation based upon large valuation swings, such as 25% or 50%.

Keep in mind that trying to time the market doesn’t work for the vast majority of investors, including professionals.  Timing the market insinuates calling the bottom and top of the market and trading accordingly, while being able to outperform the general market performance.  Based upon historical, publically available data, if an investor were to miss out on the best five days in the S&P 500 Index over the past 35 years, said investor would experience a total return less than half of what an investor would experience if remaining invested throughout all trading days.  This is not to say that buying on the dips will not be beneficial nor is selling when your equity allocation appreciates to your maximum an imprudent decision.  The goal should be to determine long-term allocation and percentage exposure, including a target allocation.  When the market experiences natural corrections consider averaging in.  When market appreciation causes your allocation to grow beyond the upper constraints of your long-term allocation, consider reducing exposure.

We welcome your feedback and would be delighted to speak with you about any specific questions or concerns regarding your investment portfolio.  Have an opinion on the recent market volatility?  We would enjoy hearing your thoughts on that as well.

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Parkway Advisors Year in Review 2017 – PRA

One of the local organizations that we support in part of our “Helpers of People” initiative is Pregnancy Resources of Abilene.

Pregnancy Resources of Abilene is a nonprofit Christian organization dedicated to promoting and defending the sanctity and integrity of all human life. Some of their services include –
– Pregnancy Testing
-Pregnancy Verification through Ultrasound Exams
-Medical Consulation and Referrals
-Pre-Natal Consulation & Education
-Material Support (diapers & formula)
-Community Resource Referrals
-Pregnancy and Parenting Classes

All of their services are free and confidential.

In March our company sponsored one of their fundraising events called Life in Bloom.  “Bloom” is their annual fundraising banquet that is held every spring. They have been honored to have wonderful keynote speakers: Max Lucado, J.C. Watts, Star Parker, Steve Arterburn, Joe White, Rebecca St. James, Michael W. Smith, Pam Tebow, Bob Goff, and Brad Stein.  In 2018 they will be bringing in Christian recording artist Matthew West.

Bloom is an opportunity to look inside Pregnancy Resources of Abilene, learn how they serve our community and catch the vision for the years to come. We are honored to be able to sponsor such a great organization. To learn more about Pregnancy Resources of Abilene click the link to their website


During the months of April and May, Parkway attended many conferences.  Two of the main ones were the AFA 2017 Executive Summit in April and the AFA 2017 Spring Symposium in May. The AFA, or American Fraternal Alliance, unites nearly 63 not-for-profit fraternal benefit societies operating in 50 states, the District of Columbia and Canada. Alliance member societies represent nearly 8 million individuals, making it one of America’s largest member-volunteer networks. Through advocacy, developing policy and providing opportunities for a broader understanding of fraternal benefit societies as financial providers and community service activists, the Alliance serves as a vital and valued resource.

We have developed great relationships with members of the AFA and look forward to continued success through those events.  In our next post we will share a little more about some of the Board Education Master Classes that we speak at helping to provide valuable information to Board Members of the Fraternal Industry. To learn more about the American Fraternal Alliance click the link to their website

Parkway Advisors Year in Review 2017 – Hendrick Home for Children

At Parkway, one of our strategic objectives is to be known as “Helpers of People.” We not only match our client’s donations to organizations they support but we also give to numerous charitable organizations in our own community.

In January 2017, we sponsored a table at the 8th Annual Dancing With the Abilene Stars. A dozen local celebrity dancers performed before a sold out crowd at the Abilene Civic Center to see who could raise the most money. This event raised $446,000 for Hendrick Home for Children.

Hendrick Home for Children raises children in a safe and loving Christian environment. The children are reared in an atmosphere of spiritual, physical, emotional and intellectual growth. They enjoy participating in all academic and extracurricular activities of their public schools. Their vacations include activities such as water and snow skiing, competitive horse shows, camping in the Big Bend of Texas and fishing in the Gulf of Mexico. Since 1939, Hendrick Home for Children has been a safe and loving “home” for thousands of children after living their early lives in poverty, abuse and neglect.


We are thankful to be a part of such a great organization.  To learn more about Hendrick Home for Children, click the link

The Next Fed Chair

The Next Fed Chair

A country’s central bank plays an important role in providing financial regulation and overseeing monetary policy.  The person at the helm of the central bank spends a lot of time in the spotlight and is essential in guiding the country through economic cycles.  Janet Yellen’s four-year term as the Chair of the US Federal Reserve System (the “Fed”), our country’s central bank, is coming to a close.  Yellen’s term ends in February and the decision for who will head the Fed next will be made in the next week.  While the Fed is independent of the political system, the Chair is appointed by the President.

As we draw close to President Trump’s decision for Fed Chair three main contenders remain: Jerome Powell, John Taylor and the incumbent Janet Yellen.  Jerome Powell is a current Fed Board of Governors member and a former investment banker.  Mr. Powell filled an empty seat on the Board of Governors in May 2012 and was reappointed in June 2014 for a term that ends in 2028.  John Taylor is a professor of economics at Stanford University but is definitely not on the outside of politics.  Mr. Taylor has served as a member of the President’s Council of Economic Advisors during the George H.W. Bush era and as the Under Secretary of the Treasury for International Affairs during the first term of President George W. Bush.  Taylor even served as a Senior Economist at the Council of Economic Advisors during the Ford and Carter Administrations.  Neither of these gentlemen are strangers to monetary policy and are threatening to Yellen’s Chair position.

Trump has said he will make his decision by November 3rd.  While Yellen has made her case before the President to maintain her role, a reappointment by Trump of the first woman leader of the U.S. central bank would be against Republican support.  As evidenced by frequent tweets, Trump has enjoyed the domestic equity performance this year, which could be attributed to Fed policy and plays in favor of a Yellen reappointment.  However, he is not afraid to make changes and he believes both Powell and Taylor to be solid choices.

So why does all of this matter?  Not only does the President need to have confidence in the Fed Chair but it is imperative for continued economic growth as our country continues to slowly step away from the loose money policies and unprecedented inflated balance sheet.  Specifically, if the Fed were to raise short-term borrowing rates too quickly or hastily unwind their inflated balance sheet it could cause inflation concerns or result in a negative reaction by the market.  It could also impact you personally.  Loose monetary policy has helped support the economic recovery.  Have you noticed all of the home mortgage refinancing or perhaps the new developments?  You can thank low interest rates and cheap financing.  An active Fed that is responsive to economic conditions will provide an environment for a quicker and more stable recovery in times of financial distress.

The market and economists are listening closely for President Trump’s announcement of the next Fed Chair.  The decision is imminent.  We have found ourselves in an unprecedented scenario and financial markets are delicate ecosystems that tend to react abruptly to change and uncertainty.  Whoever is appointed will inherit, or maintain charge of, historically low interest rates, loose monetary policy and the Fed’s $4.5 trillion balance sheet.

Goodbye LIBOR

July 28, 2017

The London Interbank Offered Rate, more commonly referred to as LIBOR, is on its way out the door.  Many associate LIBOR with scandals including manipulation and false reporting.  To others, it represents the index to which over $350 trillion of financial products reference.  Technically, LIBOR is the average lending rate of banks in the London interbank market.  However, fraud and collusion have led to the loss of reliability and ultimately the demise of the popular index.

The UK Financial Conduct Authority (FCA) announced yesterday it plans to phase out this 50-year old benchmark by the end of 2021.  The FCA’s head, Andrew Bailey, believes there is no longer a market to support LIBOR.  Moreover, he believes establishing a firm schedule will aid financial institutions to manage transition.  This is part of a global reform of benchmark rates by the FCA.

So what is the impact of the FCA’s decision?  And more importantly, how will it affect your investment portfolio?  Currently, the main impact is the uncertainty this has inserted into the market.  Since no rate has been defined as a specific replacement, financial institutions and investors are left in the dark as to what will occur.  Clearly, new investments introduced to the market will no longer reference LIBOR.  However, it is widely uncertain as to what will happen with the existing products and securities that currently associate with LIBOR.  In the short term, expect increased volatility and even illiquidity in these types of products until the market has clearer direction as to what might be replacing the benchmark index.  With regard to these products, Bailey said it depends on “preparations that users of LIBOR make in either switching contracts from the current basis for LIBOR, or in ensuring that their contracts have robust fallbacks in place that allow for a smooth transition.”

Depending upon your appetite for risk, this uncertainty could create motive to take advantage of uncertainty and capitalize on mispriced products.  Alternatively, it might necessitate avoiding any new purchase of LIBOR-linked investment products until the seas have calmed.

Parkway Competes in FIS Impact Awards

Wednesday, February 22, 2017

Parkway Competes in FIS Impact Awards

Parkway is pleased to compete in the Impact Awards of FIS and showcase elements of how we are on the cutting edge of technology.  FIS will be recognizing firms who are leveraging FIS technology and services to better serve their customers, drive tangible business benefits, and empower the financial world. The key criteria are: innovation, return on investment and client service.

Parkway utilizes FIS’ iWorks Investment Management system (formerly SunGard’s iWorks Investment Management) to prepare statutory reporting data for our insurance clients. In pursuing ways to increase efficiency and allow us more time to aid and better assist our clients, we developed a proprietary tool that extracts necessary data from a major financial software provider platform for initial data set up, new security acquisitions and transactional data as well as prepares an import-ready file for the iWorks Investment Management system. Parkway developed this tool entirely with in-house staff, merging the knowledge and sophistication of our investment management team as well as the statutory reporting team. To our knowledge, seamlessly linking daily trade activity to a tool that essentially incorporates all necessary information in the iWorks Investment Management system is an unprecedented feat that no other investment advisor has accomplished. From our insurance clients’ perspective, increased efficiency has afforded our staff more time to aid clients when they need assistance as well as find ways to better assist our clients in meeting their needs. Also, this process has allowed our team to reduce turnaround time in preparing statutory schedules for our clients on a monthly basis, providing us the opportunity to delight our clients by exceeding deadlines and expectations.

FIS provides financial software and global business solutions. iWORKS is a business-driven IT product family for the insurance industry. iWORKS offers a range of products and services including front-office tools, policy administration, reinsurance, actuarial calculations, financial and investment accounting and reporting.

Parkway Advisors, L.P. is an investment advisor registered with the Securities and Exchange Commission offering investment management, consulting, and statutory reporting services. This material is for your use only and has not been independently verified and thus we do not represent that it is complete and should not be relied upon as such. The opinions expressed are our opinions only. Past performance is no guarantee of future performance and no guarantee is made.

We welcome your inquiry and can be reached by mail at Parkway Advisors, L.P., P.O. Box 5225, Abilene, Texas 79608 or by phone at (800) 692-5123 or by fax at (325) 795-8521. A copy of our Form ADV, Part II is available upon request.

For more information, please email