Bank of the West Wealth Management Favors Large-Cap Dividend Stocks, Frontier Markets and Municipal Bonds for 2012 Portfolios

U.S. Treasuries Expected to Remain Volatile; Corporate and High Yield Issues Continue to Be An Attractive Option Due to Business Climate

SAN FRANCISCO--(EON: Enhanced Online News)--Bank of the West’s Wealth Management Group today released its 2012 investment outlook, recommending portfolio overweighting in U.S. large capitalization dividend paying equities and emerging and frontier markets. In fixed income, the group favors municipal bonds and corporate investment and high yield issues as part of its allocation strategies.

“These markets are an attractive supplement for well diversified investors as a counterbalance to developed economies. This is due in large part to the low amount of sovereign debt in emerging and frontier market countries and lack of correlation with economic and investment performance in developed economies”

Underlying the portfolio recommendations for investors are expectations for relatively modest but steady economic growth in the United States along with the potential for some additional near-term market volatility due to Eurozone issues.

“We are cautiously optimistic on the U.S. economy for 2012 and believe market fears of a double-dip recession have faded. Our expectation is for relatively slow growth in the first half of the year for the United States, followed by improved momentum as the year progresses, with GDP growth in a range of 1.5 to 2 percent for the full calendar year,” said Don Silva, head of Investment Advisory & Management for Bank of the West’s Wealth Management Group.

Improving Climate for U.S. and Frontier Market Equities

The United States’ accommodative monetary policy, improving consumer trends and strong corporate balance sheets provide a foundation for improved results at U.S. large-capitalization companies, particularly those that pay dividends, according to Wade Balliet, director of equities for the bank’s Wealth Management Investment Advisory & Management team.

The group also expects emerging and frontier market equities to perform better than more mature European markets and Japan. As a result, it recommends having an allocation in emerging and frontier markets within equity allocations in investors’ portfolios. “These markets are an attractive supplement for well diversified investors as a counterbalance to developed economies. This is due in large part to the low amount of sovereign debt in emerging and frontier market countries and lack of correlation with economic and investment performance in developed economies,” said Balliet.

“We believe portfolio strategies should err on the side of safety in 2012 and focus on countries with positive economic growth and relatively low government leverage as we see in the emerging and frontier markets especially,” said Balliet. “Weakness in developed economies ultimately could spur a resurgence of market decoupling in which the U.S. equity and emerging markets delink from slower moving developed markets.”

Continued Optimism on Municipal Bonds; Avoid U.S. Treasury Notes

In fixed income, Bank of the West’s Wealth Management Group recommends maximum underweighting in U.S. Treasuries given the volatility in the market.

“Our view is that the U.S. Treasury market will continue to be a difficult place for individuals looking for portfolio stability,” said Silva. “International developed markets will see ongoing churn as each headline, plan, and proposal from the Eurozone is reported. This can only result in continued swings in the U.S. government market as investors move in and out of the safety of U.S. Treasuries.”

The group continues its relative overweight position in the tax-exempt municipal bond category, as demand should modestly exceed supply. “We maintain our belief that high quality, liquid tax-exempt munis are among the most attractive investments in the debt market today,” said Silva.

The sound financial condition of corporate debt issuers resulting from ongoing positive GDP growth and a benign inflation outlook make investment grade corporate and high yield issues attractive options.

Additionally, the group maintains an overweight recommendation for U.S. government mortgaged-backed securities, given enhanced yields versus U.S. Treasuries and agencies, and also reduced volatility via their ongoing principal repayments.

The Wealth Management Investment Advisory & Management group at Bank of the West tracks and updates these investment themes throughout the year and applies its recommendations to the portfolios it manages for fiduciary clients.

Bank of the West Wealth Management provides wealth planning consulting, investment management*, personal banking, and trust services. The group is part of BNP Paribas’ global wealth management business of more than 6,000 professionals worldwide with nearly $10 billion** in assets under management in the United States and $365 billion (€257 billion) in assets under management globally as of December 31, 2010.

About Bank of the West:

Founded in 1874, $61.9 billion-asset Bank of the West (www.bankofthewest.com), member FDIC and equal housing lender, offers a full range of personal, commercial, wealth management and international banking services. The bank operates more than 700 retail and commercial banking locations in 19 Western and Midwestern states. Bank of the West is a subsidiary of BNP Paribas, one of the world's largest and best rated banks*** with more than 200,000 employees in more than 80 countries.

All investments involve risk. Investors should seek the advice of a financial professional regarding the appropriateness of any securities or strategies discussed. Foreign securities, especially emerging markets, will involve additional risks including exchange rate fluctuations, social and political instability, less liquidity, greater volatility and less regulation. Frontier markets have lower market capitalization and liquidity than more developed emerging markets. Treasuries are subject to interest rate risk, call risk, and inflation risk. An investment in corporate bonds is subject to a variety of risks including credit and default risk, market risk, event risk, call risk, interest rate risk, foreign risk, and sector risk. Mortgage backed securities are subject to prepayment risk. Municipal bonds are subject to a number of risks such as interest rate risk, call risk, inflation risk, credit and default risk, and tax risks.

The opinions and recommendations presented are the views of the Investment Advisory & Management team of Bank of the West’s Wealth Management Group and not of BancWest Investment Services. BancWest Investment Services does not produce investment research. The discussions and information presented should not be construed or used as a specific recommendation for the investment of assets of any customer of Bank of the West or its affiliates and is not intended as an offer, or a solicitation of an offer, to purchase or sell any security or financial instrument, nor does the information constitute advice or an expression of the Bank’s view as to whether a particular security or financial instrument is appropriate for you and meets your financial objectives. Economic and market forecasts reflect subjective judgments and assumptions, and unexpected events may occur. Past performance is no guarantee of future results.

*Investments and variable annuities are offered through BancWest Investment Services, Inc., a registered broker/dealer, Member FINRA/SIPC. Financial Advisors and Private Client Advisors are registered representatives of BancWest Investment Services, Inc. Fixed annuities/insurance products are offered through BancWest Insurance Agency in California (License # 0C52321) and through BancWest Insurance Agency in Utah, and through BancWest Investment Services in AZ, CO, IA, ID, KS, MN, MO, ND, NE, NM, NV, OK, OR, SD, WA, WI, WY

Bank of the West Wealth Management provides financial products and services through Bank of the West and its various affiliates and subsidiaries. Neither BancWest Investment Services, Inc., nor Bank of the West offers tax, accounting, regulatory or legal advice to clients.

BancWest Investment Services, Inc., is a wholly owned subsidiary of Bank of the West. BancWest Corporation is the holding company for Bank of the West. BancWest Corporation is a wholly owned subsidiary of BNP Paribas.

Investment, Annuity, and Insurance products are:

NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

** Including assets under supervision at BancWest Investment Services

***Rated AA- by Standard & Poor’s as of October 14, 2011