Last week’s top conversations were started by APViewpoint thought leaders Scott MacKillop and Larry Swedroe, and Maneesh Shanbhag, co-founder of the advisory firm Greenline Partners. They generated thoughtful discussions on harmful portfolio management assumptions, high fees associated with hedge fund investments and the costs and benefits of socially responsible investing.
Scott MacKillop’s The Portfolio Management Assumptions that Harm Clients inspired 21 comments from advisors lauding MacKillop’s piece on detrimental financial advisory practices. Advisors widely agreed that planners should have “a little humility in the face of uncertainty,” and that they should avoid relying too greatly on estimates of future market conditions. They contended that “establishing a common ground for ongoing client expectations” should be a priority, and that approaches such as diversification should be presented as a shield from future unknowns, not as guaranteed safety. APViewpoint members also suggested that advisors be responsive to changing market dynamics and adapt portfolios according to current conditions.
Maneesh Shanbhag’s Hedge Funds, Expensive Beta, Low-Cost Alpha – Replication is Better provoked three comments from APViewpoint members discussing his recent analysis on why replicating a hedge fund is better than a direct investment. Some members suggested that the strategy of replication only works when a hedge fund is long-only, and that this is problematic because the vast majority of hedge funds use shorting strategies. Members agreed that “position level replication will not work with all hedge fund strategies,” but some maintained that many individual hedge funds can be tracked through a rough understanding of their strategy and markets traded.
Larry Swedroe’s Sustainable and Responsible Investing: Is There a Price to Pay? has tallied 40 comments with varying views on sustainable and responsible investing (SRI). This week, advisors suggested that SRI may have the opposite effect than intended because it theoretically leads to higher share prices, whereas lower share prices would fundamentally benefit the majority of S&P 500 companies because they buy back shares. Moreover, some advisors suggested that socially responsible consumption (SRC) has more of an impact than SRI. Regardless of their views on the topic, all APViewpoint members agreed that if SRI is a client’s objective, advisors should inform them of any negatives that SRI implies.
APViewpoint will be hosting its next CE eligible webinar, No Portfolio is an Island, on Tuesday, June 7, at 4:15PM ET. In this presentation, David Blanchett will show advisors how to achieve a more holistic approach to financial planning and portfolio optimization. APViewpoint will also be hosting a webinar titled What Every Advisor Should Know About Bonds, on Thursday, June 16, at 4:15 PM ET. This presentation will be hosted by Brian Battle from the Performance Trust Companies, and it will review fixed-income allocation strategies for the current low-rate environment.
Marianne Brunet is a financial market analyst at Advisor Perspectives.
