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We remain vigilant in assessing near-term and longer-term risks, including U.S. austerity, resurfacing of Eurozone tensions, a Chinese economic slowdown, and oil prices/conflict in Iran. Market gains from here will be built on the back of these risks further receding and the maintenance of global economic growth. We have more confidence in the latter but know the former can result in a bumpy ride.

While the market rally in 2012 has been most supportive for directional trading and especially for emerging market managers, we remain only cautiously optimistic on these strategies since markets may soon be due for a correction. Given the prevailing uncertainties with regard to the economic outlook, we continue to prefer tactical trading strategies.

We continue to recommend a focus on the middle of the risk spectrum and investments with better prospective risk-reward. Included in this space are higher quality equities (with lower economic sensitivity), mortgage and corporate bonds (both investment grade and some high yield debt), global bonds, options-based strategies, and absolute return strategies.

One of the most important aspects of a family’s legacy planning can be philanthropy. Family philanthropy can be thought of as the organized charitable giving by several members of a family to achieve a unified goal. It is more than the annual giving of one individual or married couple, though such giving is critically important in its own right. Perhaps the key distinguishing feature of family philanthropy is the presence of a larger collective vision.

The SEC and Cayman Islands Monetary Authority are establishing mechanisms for ongoing consultation, cooperation, and exchange of information related to the oversight of regulated entities that operate across national borders. Each agency intends to provide the other with assistance obtaining information that is needed to ensure compliance within the other regulatory agency’s jurisdiction.

The effect of high oil prices on the financial markets is not clear, as there is evidence to support both a benign and more worrying view. In general, investors will start to discount a worse economic environment if we sustain significant future price increases, but the current level of global oil prices should not be a deal-killer for growth or risk taking.

The IRS has begun checking real estate transfer records in at least 15 states. So far, the new initiative has netted more than 500 cases for audit, and there will likely be many more depending on the results of the taxes collected from this initial effort. Similar initiatives are likely, as the IRS is budgeted to receive additional funds to seek out other tax cases of unreported gifts and income.

A return to a “high” market warrants a full understanding of the nature of ownership (legal title) risks in the art industry and how art investment fund managers can mitigate these risks.

New cost basis reporting rules for securities sales allow the IRS to better track an investor’s capital gains and, as a result, help the agency collect all the money it can. For investors, getting the correct cost basis recorded now is important because it will set the bar for how much they pay on future gains.

Life insurance policy owners should take heed as continued low interest rates result in lower investment returns credited to policies over time. This can be particularly troublesome for those who do not regularly review and benchmark their policy performance. This bulletin examines the impact of a low interest rate environment on insurers, the performance and management of in-force products, and pricing of new products.