Archive | November 2013

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Enhancing Performance via Tax Structuring

Astute management of investment-related taxes is a critical piece throughout the portfolio management process; tax consequences severely diminish investors’ spending power and long-term return. For wealthy families and individuals, the differences can amount to millions of dollars a year. As a result, a taxable individual investor has to accept more risk in order to get […]

How to Control Trading Costs

Controlling trading costs are complex because trading takes time, the demand for securities and other assets are not perfectly elastic, and the price impact of trades can affect the course of future prices. Return on Active Management = Expected Return +Return from Tactical/Opportunistic Trading – Trading Costs Active portfolio management attempts to outperform broad market […]

Why Market Timers Fail?

Stock market has seasonal effects and calendar anomalies, such as the January effect, the Halloween effect, the best six-month strategy, and the presidential election cycle. Seasonal and cyclical market-timing strategies challenge the Efficient Market Hypothesis (EMH). Market timers believe that the safest way to invest is to be out of the market by either be […]

Real Estate Market Commentary – November 2013

One year ending November 13, 2013, the average global non-listed real estate vehicles realized a total global return of 5.82 percent[1], as measured by the Global Real Estate Fund Index. The U.S. as a whole was the strongest performer, with an increase of 11.33 percent. The strong performance was primarily driven by improved real estate […]

Strategic Asset Allocation for Individual Investors

In developing strategic asset allocation, investors establish exposures to the asset classes agreed on their Investment Policy Statement (IPS); strategic asset allocation integrates investors’ financial objectives, risk tolerance, and investment constraints with their long-term capital market expectations. Strategic asset allocation is pivotal in executing investment plans. Strategic asset allocation specifies an investor’s desired exposures to […]

Optimization Revisit

In portfolio management, optimization is a mathematical process of assigning the proportions of various asset classes or investment styles to be held in a portfolio, in a way as to construct the most efficient portfolio, given the expected rate of returns, expected return dispersion, and some other measures of risk. Portfolio optimization takes place in […]

The Importance of Asset Allocation

Historically, common stock was deemed “per se imprudent.” The    experience of the 1930s, however, proved that bonds could be risky as well. In today’s investment practices, the New Prudent Investor Rule is a pervasive guideline: Diversification is essential to risk minimization and is therefore, ordinarily required of trustees. Risk and return are so directly related […]