Displaying items by tag: model portfolio

CAIS, a leading alternative investment platform for independent financial advisors, has launched CAIS Advisors, a registered investment advisor aimed at improving portfolio construction tools. Headed by Chief Investment Officer Neil Blundell, CAIS Advisors plans to offer advisory services and customizable alternative investment portfolios.

Blundell highlighted the challenges advisors face when integrating alternative investments into broader portfolios and emphasized how CAIS technology simplifies this process. The new division will also introduce multi-manager registered solutions, spanning private equity, real assets, and hedge funds.

 Additionally, CAIS will debut Compass, a tool designed to streamline portfolio construction using alternative investments. These launches were unveiled at the CAIS Alternative Investment Summit.

Finsum: Model portfolios and construction tools can greatly improve advisor effectiveness and efficiency. 

Portfolio construction is crucial for any investor, whether a beginner or experienced, as it helps balance risk and maximize returns. The key is to ensure each investment serves a specific purpose within the portfolio, rather than just collecting assets. 

Diversification, or spreading investments across different asset types, reduces risk by balancing higher-risk stocks with safer options like bonds. ETFs, particularly passive ones, offer a simple and cost-effective way to achieve diversification, providing exposure to a wide range of assets. 

Understanding your risk tolerance is vital, as it influences your portfolio's composition. Lastly, keeping long-term goals in mind is essential for managing both risk and return.

Finsum: Advisors could really benefit by integrating basic portfolio metrics into their calculations, such as Sharpe and Sortino ratios. 

Macro conditions are currently tumultuous, with inflation rates surprising on the low end and unemployment figures exceeding expectations. This uncertainty makes it a challenging time for investors, as the debate continues over whether positive news is beneficial for markets. 

U.S. equities are trading at high levels, prompting louder calls for caution and diversification. Asset managers, like BlackRock and State Street, are adjusting their model portfolio strategies, with BlackRock leaning into U.S. growth and quality fixed income, while State Street is increasing international equity exposure. 

These adjustments to model portfolios reflect a broader trend toward diversification amidst uncertain economic signals. As we move forward, monitoring these strategies can provide insights into navigating the market's complexities.

Finsum: As models recalibrate maybe its time to do the same in your own portfolio, but keep in mind this is a natural perk of active funds.

The nature of being a financial advisor has shifted significantly over the past decade. It’s gone from being centered around selecting investments and managing portfolios to financial planning and client service. Model portfolios have been ascending along with this evolution and are forecast to exceed $1 trillion in assets over the next decade.

According to surveys, clients invested in model portfolios are more likely to have higher levels of trust with their financial advisors and believe that volatility is an opportunity to grow assets. Additionally, they are more likely to be interested in other services offered by an advisor. They can also help in terms of aligning the interests of advisors, the firm, and clients. They also free up time and energy for advisors to spend on factors that ultimately drive success for advisors, like client service and prospecting. 

Another benefit is that model portfolios provide an extra layer of due diligence, with 77% of advisors saying that they help with managing risk. In essence, it gives clients access to a higher quality of investment management and a more comprehensive relationship with an advisor.

Models also mean that advisors’ services become more scalable, enabling growth and expansion. In recent years, models have expanded to include offerings from third parties and a wider array strategies, which means there are possibilities for endless customization to fit clients’ unique needs and goals.

Finsum: Model portfolios bring the promise of a win-win for clients and advisors. Clients invested in model portfolios report higher levels of confidence with their advisor and don’t fear volatility. For advisors, they offer the ability to decrease time spent on investment management and focus more on client service and prospecting.

What is the best way to manage a portfolio in an era with less structural disinflation, and how can you improve upon the 60/40 in the current environment 

 The traditional 60/40 portfolio, consisting of 60% stocks and 40% bonds, has long been a benchmark, balancing growth from stocks with stability from bonds. However, the historical success of this model relies on a period of declining interest rates and favorable economic conditions in the U.S., which may not persist in the future. 

As interest rates stop declining and inflation potentially rises, the performance of the 60/40 portfolio is expected to be less impressive, especially during high inflation periods when energy and commodities tend to outperform. To better manage portfolios in this new environment, it’s advisable to diversify beyond the 60/40 mix by including assets like commodities, real estate, and cash equivalents to hedge against inflation and provide more stability during economic shifts.

Finsum: We have seen an increased correlation between stocks and bonds in the most recent years suggesting alternative diversification to manage volatility.