U.S. investors can build international equity by investing directly in overseas markets or by purchasing shares of American depositary receipts. The method selected will have important implications for transaction costs, ongoing fees and benchmark tracking.
In building emerging market allocations into a portfolio, investors should adopt a well-structured investment process, evaluate those allocations at the portfolio level, pursue constrained optimization techniques and use a risk model to continuously control their risk exposures.
In normal markets, typical long/short funds show beta behavior similar to that of long-only funds. With certain specialized short positions, a declining equity market generates both higher profits and higher levels of short exposures. However, these funds may require large liquidity reserves for rebalancing.
We believe emerging markets investment in significant size will be essential to achieving above average portfolio growth in equity markets, public or private. Currently, we believe a commitment to emerging markets should fall in the range of 25% to 30% of marketable equities and private equity.
Analysis shows the inflation hedging benefits of long-term investments in commodities, which have a low correlation over time with equities. Diversification with a broad basket of commodities is best to smooth out the volatilities of individual commodities, such as oil or gold.
Family foundati ons and their investment advisors are increasingly exploring frameworks, working relati onships and investment portf olios designed to align investment strategy and implementati on with the mission and values of the philanthropic organizati on. Investi ng for fi nancial return and giving for charitable return originated as disparate acti viti es, but today we increasingly must view them as interrelated acts requiring some level of collaborati on or, even better, a degree of complementary eff ect or synergy.
Investment innovation and rigorous discipline; dynamic, seamless planning; and a different quality of client-advisor engagement will be key to the achievement of long-term objectives for wealth accumulation, protection, spending and transfer as well as to peace of mind.
The author examines why investors often embrace misperceptions preventing them from making corrective portfolio reallocations at critical junctures, attempts to put the recent 30-year fixed-income bull market into historical perspective, identifies underlying changes in long-term trends, and discusses how prime consumer lending may help reduce overall fixed-income portfolio risk.
In the first of a two-part series, the author defines the various types of investment styles and strategies of long/short equity managers, as well as explores their portfolio construction characteristics and techniques.
As states have struggled with the fall-off in tax revenues from the financial crisis and ensuing recession, they have experienced very difficult budgeting processes. Despite these difficulties, almost all the states began the 2011 fiscal year with improving budgets.