Resource Search

For centuries, corporate and consumer lending has followed a traditional model in which financial institutions act as centralized counterparties, making loans funded by deposits. Around 2006, this model was turned on its head by a new breed of fintech companies leveraging the network effect of the internet to directly connect lenders with borrowers. Today the marketplace lending model is evolving into a new phase, as institutional investors are increasingly allocating capital to marketplace loans in search of higher yield and diversification.

One of the most important elements in portfolio construction is positioning the portfolio properly to allow it to meet personal and investment liquidity needs under various market conditions. Understanding how volatility impacts cash management—including reviewing cash flow sources and uses typically contained in liquidity planning—is critical in building a solid framework for your investment portfolio.

Family office investment vehicles often are organized as limited partnerships or LLCs treated as partnerships for federal income tax purposes. Typically, the manager of such a partnership receives an interest in the partnership’s profits (a carried interest) in connection with the management services, in addition to management fees paid by the partnership. With the new Tax Cuts and Jobs Act, the tax treatment of such carried interests and management fees have changed.

Following the first negative quarter for domestic stocks since 2015, the second quarter of 2018 began on a sour note, with the S&P 500 Index falling 2.2 percent and the technology-heavy NASDAQ dropping 2.7 percent today. Consumer discretionary stocks were also notably weak performers while international stocks fared only slightly better than their domestic brethren. For their part, bonds offered small compensation for diversified investors, with U.S. Treasuries increasing only modestly in price.

After remaining dormant for most of 2017, market volatility returned with a vengeance in the First Quarter of 2018. Concerns over rising interest rates and inflation overcame positive news on economic growth and corporate earnings, triggering a selloff in both bonds and stocks in early February. The VIX index of implied equity market volatility spiked, startling some investors who had become complacent about downside risk.

As the economic cycle progresses, the next recession draws inexorably closer and brings with it the next downturn in the credit cycle.

The United States has been the world’s undisputed economic superpower for more than a hundred years. Yet in the long arc of history, that dominance has been relatively brief. For thousands of years, China stood as the world’s economic leader and a true global power. For that reason, many Chinese believe that the United States’ economic dominance is but a historical blip that will eventually see China return to its rightful place as the world leader.

More than any other segment of the population, the wealthy understand the power of leverage in today’s environment. Borrowing against an investment portfolio not only has the possibility of boosting returns, but it can also provide liquidity in a tax-efficient way. With relatively low current interest rates, investors may want to consider borrowing against their investment portfolios to fund major purchases and improve investment returns. Margin loans and non-purpose lines of credit are two effective ways to do this.