This essay is devoted to understanding how two key investment principles – a long-term equity time horizon and diversification – have performed in past periods of severe economic dislocation. Analysis demonstrates that maintaining these principles has proven extremely valuable, particularly in periods of volatility.
Tail risk can be reduced by enhancing a portfolio's overall risk-return characteristics. Often this approach will blend several distinct strategies: broader diversification, volatility-based risk management, and drawdown control, perhaps combined with active management strategies such as managed futures or low-beta equities.
Early-stage direct deals involving start-up businesses, real estate developments or similar high-risk, high-return opportunities should be evaluated very closely on the merits as well as the risks. Each opportunity is different and all require unique in-depth due diligence, but there are some general questions that should always be asked, the autho...
An attorney/entrepreneur makes the case for investing in commercial claims. Investors in this specialty finance sector supply capital to companies to pursue their claims and hedge the risk of loss and, in return, receive a percentage of the claim proceeds.
This paper offers a practical look at how an individual or family might plot a successful road map that aligns and grows with their unique abilities, needs, and personality. The authors detail the steps in a philanthropic asset allocation process involving fact-finding, planning, and continuing assessment as seen through the eyes of three hypotheti...
Investors and advisors focused on wealth growth and preservation may see environment, social, and governance/socially responsible investing as taxing a portfolio's performance. This paper offers a framework with associated metrics for assessing ESG/SRI integration into the portfolio with the same rigor and discipline used in all other fiduciary dec...
Master limited partnerships represent a niche asset class that is gaining attention for its attractive yield potential, historically low correlation to other asset classes, and potential tax benefits. Strong industry fundamentals, attractive valuations, and above-average dividend yields provide a compelling entry point for investors looking at MLPs...
Innovation in manufacturing is critical to global growth and development. Investing in companies in the areas of electrical equipment, industrial machinery, and distribution will help these companies contribute to the advancement of the global standard of living, while benefiting investors, shareholders, and clients.
Despite continued concern about sovereign debt, particularly in Greece, the bank’s 11-member investment committee is encouraged by improved business surveys in the U.S. and some emerging markets as well as tentative improvements in Europe. Here, committee members assess the outlook for fixed income, equities, commodities, real estate, and currencie...
This latest quarterly issue of “ViewPoint” features an interview in which the bank’s chief investment officer discusses his outlook for the global economy and capital markets for 2012. He notes that the U.S. should exhibit positive growth, boosted by capital spending, and that a growing U.S. economy should keep the global economy ...
While the outcome of many global issues remains uncertain, we believe the risk/reward equation favors taking well-calculated, above-average risk. Investor psychology can change at any moment. When the market returns its focus on individual company fundamentals, we expect significant alpha will be generated by portfolios that own high-quality compan...
Income-generating vehicles make a lot of sense in this environment. Last year, a key part of our message was to focus on yield-oriented strategies, ranging from high-yield equity managers to energy MLPs to floating rate debt and emerging market bonds. We believe that adding to the enhanced yield strategy through a position in non-investment-grade d...
The financial crisis that began almost five years ago is still with us, and we are still dominated by the events unfolding in Europe. What are some of the root causes of the crisis, and what is the future likely to hold? This white paper examines the evolution of the financial crisis and offers advice on how investors might best navigate the comple...
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 stra...
Modern portfolio theory, while highly useful in illustrating the relative tradeoffs between current and prospective portfolio allocations, should not be used as the primary framework for constructing portfolios for wealthy families. Investors are better served, the authors say, by a goals-based approach that recognizes multiple levels of risk toler...