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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
February
23, 2010- Vol 4, Issue 8
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Sign up here for a free webinar, "The Fiduciary
Opportunity" on March 16 at 4pm EST where Envestnet discusses the
rules governing advisors. Join them for this free webinar to learn more
about the pending legislation and the implications to the financial
industry.
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The current generation of financial advisors has never experienced rising
interest rates, but that will change, based on the forecasts we collected
in our survey last week. We review our survey results and look
at the implications for the largest bond portfolio, the PIMCO Total
Return fund.
Jason Zweig is a senior writer and
columnist for Money magazine and frequently writes for the Wall
Street Journal. In this interview, he discusses strategies for
protecting client wealth, proper asset allocation, and the role of advisors
in a fiduciary relationship.
Dave Loeper of Wealthcare Capital
Management responds to last week's $100,000 challenge to passive
managers by Roger Schreiner. Loeper says Schreiner
"stacked the deck" to make his challenge un-winnable, and instead
offers his own challenge to active management advocates.
Dan Richards says advisors need to
fundamentally rethink both the information they communicate and - just as
importantly - how they communicate. Changing these two key dimensions
of your communication strategy - what you send clients and how you send
it - will be critical to future success.
Uncovering new ideas is an essential piece of portfolio management,
says Mariko Gordon of Daruma Asset Management. In practice, however,
maintaining a steady idea flow is sometimes a challenge. She
takes a look at why, and offers a different perspective on what really
matters.
In this guest contribution, David Vincent of Fred Alger says investors
interested in gaining exposure to the small-capitalization growth equity
style should consider the small/mid ("SMid") capitalization
style as a way to capture the benefits of small-cap growth.
In this letter to the Editor, an advisor responds to last week's
article, Boom and Bust, by Michael Lewitt of Harch
Capital Management.
Lastly, we highlight submissions to Advisor Market Commentaries.
We welcome guest submissions from our readers. For more
information, here are
our guidelines.
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Advisors, based on their forecasts, expect to earn higher returns in
inflation-protected securities than in the Total Return fund over the next
three years. Moreover, their perceptions of the risks in the fund
appear to be unrealistic.
Interest Rates, Inflation and the PIMCO Total Return Fund
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Jason Zweig on
Protecting your Wealth
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"The entire
propaganda infrastructure that has been dedicated to ramming commodities
down people's throats is very disturbing," says Jason Zweig.
"Other than generating massive fee revenue for Wall Street, I would be
very surprised if a buy-and-hold, long-only commodity position is going to
do anybody any good in the long run."
Jason Zweig on Protecting your Wealth
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The $2 Million Charity
Challenge to Active Investors
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"I challenge twenty active (or passive or pseudo-passive) managers to put
up $100,000 each in the form of ten years of annual $10,000 contributions
deposited to the account the first business day of each calendar year
starting January 2, 2011," says Dave Loeper. "At the end, we
simply measure the dollars in the account...no misleading statistics that
can't be spent!"
The $2 Million Charity Challenge to Active Investors
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Rethinking the
Fundamentals of Client Communication
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"As you move into 2010, take a hard look at every aspect of your
business. As part of that, it's essential that you closely examine not just
WHAT information you send to clients - but HOW you communicate that
information."
Rethinking the Fundamentals of Client Communication
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"In our experience, both investors and clients find comfort in
believing that there exists a steady flow of new ideas," says Mariko Gordon.
"But we shouldn't collude in that desire for comfort. The commonly
asked question, 'Where do your new ideas come from?' is largely missing the
bigger, more essential point."
Drilling for Dummies
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An Analysis of the
Risk and Return of Small/Mid-Cap Growth
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Research from Fred Alger
shows that the SMid growth space can offer diversification and low
correlation to larger-cap equities with additional benefits gained from
exposure to the lower cap range of the mid-cap growth space, which offers
attractive performance and risk/return characteristics.
An Analysis of the Risk and Return of Small/Mid-Cap Growth
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In this letter to the Editor, an advisor responds to last week's article,
Boom and Bust, by Michael Lewitt of Harch Capital Management.
Letter to the Editor
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Highlights from
Advisor Market Commentaries
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If credit, equity prices and the economy are on a downward primary trend
this year and 2009 was indeed a counter-trend bounce, then the appropriate
course of action is to capitalize off the rally in assets last March and
figure out how to still make money on a risk-adjusted basis. Rosenberg also
examines February's recovery in the National Association of Home Builders
housing market index and fiscal woes at the state level.
The Return of the Primary Trend by David Rosenberg of
Gluskin Sheff
An investor's choice of assets if far more important than the times he
decides to buy or sell those assets. In a nutshell, the ultimate buy-and-hold
strategy is this: Use no-load funds to create a sophisticated asset
allocation model with worldwide equity di-versification by adding value
stocks, small com¬pany stocks and real estate funds to a traditional
large-cap growth stock portfolio.
The Ultimate Buy-and-Hold Strategy: 2010 update by Paul
Merriman of Merriman
A credible IMF program that combines financial support with the progressive
achievement of fiscal and structural reform goals, though risky, may be the
right solution to the Greek debt crisis. Such a program may also minimize
the moral hazard presented by guaranteed loan programs.
The Greek Picture Complicates Further: Is the IMF the
Solution? by Nouriel Roubini of Roubini Global Economics
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