Capital Market Commentary, Asset Allocation Views, and Portfolio Construction Implications
The goal of our ASSET ALLOCATION ADVISORpublication is to review key recent and prospective developments in the broad asset classes of stocks, bonds, real estate, commodities and currencies. We approach our analysis from the perspective of a multi-asset class investor and our recommendations are geared at making overall portfolio decisions.
Our approach evaluates prospective returns, volatilities and asset-class correlations in the context of several goal-oriented portfolios including the 60/40 traditional mix. Emphasis is placed on recent shifts in portfolio composition and the effect of changing expectations for returns, volatilities and asset co-movements on target portfolio allocations.
We seek to provide clear, concise, and actionable ideas that can be easily implemented. Our ASSET ALLOCATION ADVISOR report is published monthly and is available by subscription.
Global Equity Strategy Assessment, Themes, and Trends
In our EQUITY OBSERVER publication we examine the global equity markets by breaking down performance along region/country, sector/industry and style factors. Our goal is to identify pockets in the markets with attractive reward to risk opportunity. We identify nascent themes in the equity markets. We also look for crowded trades or themes that might be running their course.
For themes that we identify as attractive we evaluate their risk/return profile and identify a basket of representative stocks. Similarly, for themes that we consider unattractive, our approach identifies a basket of stocks and its corresponding risk profile. Our methodology relies on extensive analytical work, but as always our approach is conceptually motivated.
As with our other research publications, we seek to provide timely and actionable ideas that can be easily implemented. Our EQUITY OBSERVER REPORT is published monthly and is available by subscription.
Comprehensive Portfolio Reviews
One of the biggest challenges facing investors today whether they are a large institution or an individual is determining the overall fit of their many different investments with their stated goals and willingness to tolerate short-term adverse developments in their portfolio. Not only are there usually many moving parts to a representative portfolio, but the behavior of the parts may not be well understood. For example, the portfolio may be heavily concentrated toward a small number of economic sectors or heavily tilted toward smaller capitalization stocks, and thus not offer the necessary degree of diversification.
Another frequently observed situation is when a portfolio contains a very large number of investments without any rhyme or reason. These investments may give the illusion of diversification, but are frequently highly correlated with each other and lacking a clear role in the portfolio. Even large sophisticated institutional investors periodically face this need to simplify and clarify the role of investments.
Since each clients’ objectives and constraints are unique to their financial situation we offer our consulting services on a project basis. At the end of our assignment we provide clients with a comprehensive perspective of their current portfolio, it’s fit with the stated objectives of the client, and, if necessary, recommendations for change.
Alternative Strategy Assessment
Alternative asset strategies such as hedge funds, private equity and commodity trading advisors have captured the imagination of institutional and high net worth individuals. Alternative strategies are almost always more complex than traditional investments. Leverage is usually a key component of these strategies and it is not unusual to find high concentrations of illiquid securities. In addition, complex capital structure trades are sometimes executed creating, at times, risk structures not readily apparent to the naked eye.
Our methodologies allow us to statistically break down the exposure of a specific alternative investment strategy to common style and asset class factors thus giving us a reasonable proxy for the risk and return of the strategy as well as for its uniqueness and potential manager skill.
At Global Focus Capital we help investors disentangle the complexity of alternative strategies by focusing on the conceptual rationale of the strategy, its risk, return and liquidity profile and the strategic fit of the strategy in the context of the client’s overall portfolio. We will also at a client’s request put together a total portfolio solution of alternative investments and recommend specific implementation strategies.