The most effective investment strategy may be to employ an approach recognizing that investment markets move in a more cyclical than linear fashion. This approach would include seeking extreme valuations, respecting the trend in the absence of extremes, and increasing the opportunity set by exploring the full-risk spectrum.
A move from one investment manager to another comes with costs that are not easy to identify but should be considered before making the switch. A transition manager can help in assessing the issues and coordinating the logistics and the execution process.
Commodity allocations in model portfolios have moved from being exotic to commonplace. The benefits being sought by such allocations typically include protection against inflation and diversification. While commodity allocations can serve both of these roles handily, the manner in which some clients implement these strategies potentially reduces the desired benefits.
Most investors believe an index-based ETF, ETN or swap will give them an experience similar to the equity markets, where an index-based product represents an unbiased view of the market portfolio, using market capitalization as weights. Unfortunately, this intuition proves misguided due to important differences in how these indexes are constructed.
The authors discuss their criteria for choosing alternative investments, the number of these investments to include in a portfolio, how to allocate strategically and when to change that allocation, and the practical challenges for implementation.
Politics still seem to trump economics in the United States and Europe, although a renewed U.S. downturn seems avoidable and Greece is likely to move ahead with an orderly default. Now may be the time to consider a modest increase in equity risk positions, particularly for information technology and financials.
Families that successfully manage generational planning actively foster communication and trust within the family, identify shared values that define the family, take time to establish a thoughtful family governance system and give younger members the opportunity to have an impact through active participation in family affairs.
A business transition plan should provide a good fit: for the business, for family members and for the owner. A transition road map also should provide clear instructions in the event of the owner's incapacitation or death – a sound reason to establish a plan sooner rather than later.
Entities that do not satisfy the conditions of the new Family Office Rule may continue to operate as a family office until March 30, 2012, when they must register with the Securities and Exchange Commission or change their operations to qualify for exclusion from registration.
Producing alpha over long periods of time requires keen investment insight, leadership in exploring untapped opportunities and inefficiencies, and integrating a robust risk management process that addresses concentration, illiquidity, and transparency. This paper addresses how each of these inefficiencies may be exploited to help generate alpha.