Skip to main content
Category

Alternative Investments

Oct 28
Love0

How To Invest Like The Ivy League Endowments with ETFs

By Alternative Investments, ETF Related

Seeking Alpha published an article by Prateek Mehrotra outlining how ETFs can help investors build institutional quality portfolios diversified into liquid alternative investments designed to improve long-term risk adjusted returns. The article summary

  • The country’s largest endowments aim to preserve capital while producing income and appreciation with less correlation to the stock market regardless of market conditions.
  • Performance among Ivy League endowments and retirement plans that invest like them varied widely last year but in the long run, they posted stellar risk-adjusted returns.
  • You can invest like an Ivy League endowment yourself with a basket of ETFs offering exposure to all of the major asset classes in their portfolios.

The entire article can be read on the Seeking Alpha website.

Sep 19
Love0

Comparing the Nation’s Largest Pension Fund Asset Allocation and Return History to the Endowment Index™

By Alternative Investments, Endowment Index™

The nation’s largest pension fund, the California Public Employees Retirement System, better known as CalPERS has been in the news this week with an announcement that they are going to be liquidating their $4B hedge fund allocation over the next year.  Apparently, the high costs and complexities, combined with their ability to scale the asset class relative to their $300B portfolio just isn’t worth the effort.

While on the surface this may seem like shocking news, in reality, this isn’t surprising – its simply another data point confirming the transition from traditional alternatives to liquid alts is real and likely to continue.  Given the higher costs, and other burdens (K-1 tax returns, lockups, accredited investor mandates, lack of transparency, scandals/Madoff, high minimums, and others) with the partnership form of traditional alternatives, its logical that more advisors and investors will continue to consider liquid alts as either a replacement for their traditional alternatives allocation, or to in an effort to enhance their traditional two-dimensional stock-bond portfolios.

CalPERS announcement prompted us to take a closer look at their portfolio as compared to the Endowment Index™ calculated by Nasdaq OMX®.  The Endowment Index represents the asset allocation portfolio holdings of over institutions managing over $400 billion in total assets.

Endowment Index™ vs. CalPERS Asset Allocation and 10 Year Return History

Endowment Index vs CalPERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*For 10 year period ending June 30, 2014.  Returns are annualized.

Past performance no guarantee of future results.  The above is presented for informational purposes only and is not intended as investment advice.  Index data presented for comparison purposes only. Indexes don’t have fees. You cannot invest directly in an index.  Endowment Index data prior to May 19, 2014 contains backtested data, which contains certain weaknesses.  Click here for additional disclosure on back testing.

Jun 23
Love0

Alternative Investments: A Mystery to Many Affluent Investors

By Alternative Investments

An article from ThinkAdvisor.com titled Many Affluent Investors ‘Have No Idea’ What Alt Investments Mean: Survey, by Melanie Waddell, details results of a recent survey that indicates many investors, despite having an advisor, find themselves unaware of what alternative investments are and whether they are utilizing any.

The survey included investors from the ages of 35-65 with at least $200,000 in investable assets. This target group makes the statistics even more startling because they show that alternative investments are not understood by people likely to incorporate them in their portfolio.

This isn’t surprising news to us. At Endowment Wealth Management, we are committed to understanding our clients’ needs and then help educating them on proper asset allocations to achieve a globally diversified endowment portfolio.

We have built our entire firm on helping clients to better understand their investments.  It starts with our name… Endowment Wealth Management.  We named the firm after our investment philosophy.  The Endowment Investment Philosophy® (EIP) combines three major asset allocations into every client portfolio: Global Equity, Global Income, and Alternative investments.  When combined with our straight talk, using terms that our clients can understand, rather than financial jargon people don’t fully understand, we see their level of engagement rise. For instance, when describing the three asset class buckets that comprise their portfolio, we use a football analogy Equity (offense), Fixed Income (defense) and Alternatives (special teams).  We also designed notepads, which are watermarked with a graphical representation of the 3 dimensional EIP showing how a portfolio will be structured. During our meetings, we use those sheets to breakdown client’s portfolio of traditional and alternative investments according to their goals.  At the end of the meeting, they tear off the note sheet as their primary take-away from the meeting because that’s how they understand the importance of including alternative investments in their portfolio.  People hire us, not just for our professional expertise, but because they also understand our team, our investment philosophy, and where they are going.

If you have an investing question or would like assistance when constructing an endowment portfolio and the importance of using alternative investment allocations, please call our office at 920.785.6010 or contact Rob directly at [email protected] to set up a private, no-obligation wealth consultation.

By Robert Riedl CPA®, CFP®, AWMA

To read Many Affluent Investors ‘Have No Idea’ What Alt Investments Mean: Survey:  http://bit.ly/1nSWKSx

Information presented is for educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies, nor shall it be construed to be the provision of investment advice.  Investments involve risk and unless otherwise stated, are not insured or guaranteed.  Be sure to consult with a qualified financial advisor and/or tax professional before implementing any investment strategies discussed herein.  While the firms are related and share corporate offices, Endowment Wealth Management, Inc. and ETF Model Solutions, LLC are each individually registered as an investment adviser in the State of Wisconsin.   A copy of Endowment Wealth Management’s disclosure      document, Form ADV Brochure Part 2, is available upon request.