FoxConnects April 2006

Industry Trends

• The Health of Global Financial Markets

International Trends

• Study Finds India Could Become a Significant Global Force
• Viewpoint: China / Emerging Markets

Investment Planning

• Key Investment Themes
• Focus on Real Estate:
  • Real Estate Investment Strategy Annual
  • Deloitte 2006 Real Estate Capital Markets Industry Outlook
  • A Froth-Finding Mission _ Detecting US Housing Bubbles
  • Protecting The Value Of Real-Estate Rich Portfolios
• Fundamentals-Weighted Indexing Attracts Investor Attention
• Alpha-Beta Separation
• Assessing Risk Factors of Hedge Funds

Integrated Planning

• The Implications of Possible Federal Tax Reform
• Legislative Proposals Update

Managing Risk and Liability Exposure

• Investment Due Diligence Examined

Family Continuity and Governance

• A Focus On Pre-nuptials
• Planning For A Child With Special Needs

Family Education

• Find And Focus On Your Strengths

Lifestyle Management

• Fractional Aircraft Ownership

Technology Trends

• The Use of IT In Grantmaking

Strategic Philanthropy

• The Tax Implications of Charitable Gifts Overseas
• Planning For Art And Collectibles

FOX News

• Register for the Wealth Advisor Forum May 17-19, 2006
• Webinar Replays Newly Available on the FOX Website

Industry Trends

The Health of Global Financial Markets

In the latest issue of its Global Financial Stability Report, the IMF offers an upbeat assessment on prospects for stability in international financial systems. It points to factors including strong corporate earnings and a continued increase in disposable personal incomes, which have led to substantial financial cushions in practically all major markets.

• Read "Global Financial Stability Report"
• Read summary comments by the Chairman

International Trends

Study Finds India Could Become a Significant Global Force

A Deutsche Bank Research paper examines the recent transformation of India and its potential to become a global economic powerhouse that could ultimately play a pivotal role in world affairs.

• Read "India as a Global Power"

Viewpoint: China / Emerging Markets

Two short papers from TCW explore international investment themes relating to China and emerging markets. Both are broadly positive on future trends and opportunities, while also describing some of the high-level risks.

• Read "Volatile Chinese Market Requires Steady Hand"
• Read "Has Goldilocks Overstayed Her Welcome in Emerging Debt Markets?"

Investment Planning

Key Investment Themes

Against the backdrop of a maturing global expansion, JPMorgan examines ten market and investment themes for the private investor, encompassing asset classes (international equities, property); regions (Asia ex Japan); strategies (use of credit / manager strategies); sectors (biotech) and scenarios (rising taxes / oil prices). Also includes "Financial Markets 101s" -- airplane reading for family members to help them up the investment learning curve.

• Read "On My Mind"

Focus On Real Estate

After year of rising prices and compressed yields, is are global real estate markets in bubble territory? US FoxConnects rounds up some differing perspectives, encompassing both US and international markets

• Real Estate Investment Strategy Annual
  LaSalle Investment Management offers a detailed analysis of the medium term outlook for real estate investment, by major country / region. It seeks to address three main questions - is risk-reward still attractive? What are the longer-run secular shifts to build into a portfolio? And what are the shorter-run cyclical shifts to look out for?

  Read "Investment Strategy Annual"

• Deloitte 2006 Real Estate Capital Markets Industry Outlook
  Deloitte has written a paper examining the top ten trends in global real estate capital markets. Includes thoughts on key international trends, including the "global gold rush" to invest in developing markets.

  Read the Deloitte 2006 Real Estate Capital Markets Industry Outlook

• A Froth-Finding Mission: Detecting US Housing Bubbles
  According to research by HSBC, around half of the US housing market is frothy. This "bubble zone" may be overvalued by as much as 35-40%, yet it accounts for half of US GDP, or over $6 trillion. Includes detailed price analysis by state, highlighting areas of potential under- / over-valuation.

  Read "A Froth-Finding Mission _ Detecting US Housing Bubbles"

• Protecting The Value Of Real-Estate Rich Portfolios
  A special report by Citigroup Private Bank and Wharton School considers where real estate markets are headed. It examines the impact of higher interest rates on US commercial real estate, and seeks to identify international opportunities. It also highlights defences for real-estate rich portfolios, most important of which is sensible asset allocation.

  Read "Protecting The Value Of Real-Estate Rich Portfolios"

Fundamentals-Weighted Indexing Attracts Investor Attention

Investors have begun to sing the praises of fundamentals-weighted indexing _ essentially, allocating capital to stocks according to weights of fundamental metrics such as earnings, dividends, cash flow, sales and employment. Two articles by State Street Global Advisors shed light on the approach.

• The first article describes the concept, including evidence of outperformance.

  Read "Fundamentals-Weighted Indexing Offers New Insight on Value Investing"

• The second article describes the value premium in relation to fundamentals-weighting.

  Read "A New Perspective on the Value Premium"

Alpha-Beta Separation

A paper by PIMCO outlines the concept of separating manager skill (alpha) from market risk and return (beta), and transporting the alpha to another market index (portable alpha). While results can be powerful, portable alpha strategies can have negative effects if not managed in controlled fashion by experienced professionals.

• Read "Alpha-Beta: Separation, Transportation, and Recombination

Assessing Risk Factors of Hedge Funds

The historic performance of hedge funds can appear attractive from a mean-variance perspective, but to what extent is this outweighed by the potential for large losses ("extreme event risk")? An award-winning article by Todd Brulhart and Peter Klein, published in the AIMA Journal, examines the issue. The authors find in favour of hedge funds, while cautioning about tools often used to analyse them.

• Read "Problems with 'Extreme Hedge Fund Returns'"

Integrated Planning

The Implications of Possible Federal Tax Reform

Hammond Associates has started a Private Wealth Quarterly Research Report, designed to focus on tax issues impacting private clients. Its first issue examines the potential for tax reform arising from the President's Advisory Panel on Federal Tax Reform. If enacted, how should investors respond? The report also includes The Hammond Associates' regular quarterly market commentary.

• Read "Private Wealth Quarterly Research Report"

Legislative Proposals Update

A paper by Greenberg Traurig documents tax-related legislative proposals.

• Read Legislative Proposals"

Managing Risk and Liability Exposure

Investment Due Diligence Examined

"Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital." When it comes to selecting money managers, Contego Capital Partners advises investors to step back from the numbers -- specifically historical performance -- and rely much more on a qualitative judgment of people, strategy and process.

• Read "Structured Products November 2005 Monthly Commentary"

Family Continuity & Governance

A Focus On Pre-nuptials

An extract from a book by John Mayoue, made accessible to FOX members by Atlantic Trust Private Wealth Management, examines the rationale for, and continued appeal of pre-nuptial agreements.

• Read chapter excepts from "The Rights of Relationships and Prenuptual Agreements"

Planning For A Child With Special Needs

A paper by Philanthropic Advisory Services discusses the role of estate planning in providing for the future care and financial support of a special needs child. Includes reference to the Special Needs Trust, a tailored vehicle that enables beneficiaries to remain eligible for government support.

• Read "Planning for a Child With Special Needs"

Strategic Philanthropy

The Tax Implications of Charitable Gifts Overseas

Charitable gifts by Americans to fund overseas projects have increased dramatically in recent years, yet many donors and advisors remain unaware of the complex tax rules governing such gifts. A paper by Fidelity Charitable Services examines the rules as they apply to both private individuals and foundations.

• Read "Cross-Border Grant-Making by Private Foundations"

Planning For Art And Collectibles

While auction prices for art and collectibles are at near historic highs, private clients and advisors can fail to focus sufficiently on planning for these assets. A second paper by Fidelity Charitable Services examines key issues, including valuation, charitable gifts, and non-charitable planning. It argues that, structured properly, charitable gifts can be a tax-efficient way of keeping a collection intact.

• Read "Estate and Charitable Planning for Art and Collectibles"

Lifestyle Management

Fractional Aircraft Ownership

Fractional aircraft ownership may have lost some of its gloss as the main providers struggle to be profitable. An article appearing in Flight International magazine confirms that fractional ownership for private travel is here to stay. Special thanks to Bombardier for bringing this article to our attention.

• Read "Fact and Fraction"

Technology Trends

The Use of IT In Grantmaking

A survey conducted in July 2005 by the Technology Affinity Group and the Council on Foundations offers a detailed account of the technology usage of grantmakers. It found a surprising lack of progress in implementing technology systems. The authors conclude that the philanthropic sector is not yet taking advantage of technology to streamline business processes or enhance efficiency.

• Read "2005 Grantmakers Information Technology Survey Report"

Family Education

Find And Focus On Your Strengths

Human nature tends to dwell on things that go wrong, while glossing over the successes. In a paper originally published in More Than Money Magazine, Carol Kauffman calls us to reverse our focus, to identify our signature strengths, and to find new ways of using them.

• Read "Leaning Towards the Light"

FOX News

Register for the Wealth Advisor Forum May 17-19, 2006

At this premier event, you'll gain many important insights needed to chart your course for outstanding client development and service. With special emphasis on navigating family transitions, this year's exclusive program will provide a special opportunity to hear wealth owners and family office professionals describe what they expect and most value from their advisors. You'll also hear from your peers as they share the strategies they've used to successfully build and sustain robust wealth management practices.

• Information/Registration
• Register Online

Webinar Replays Newly Available on the FOX Website

2/15/06: Educating the Next Generation: Practical Lessons From Financial Families
Featured Speakers: Don Nelson, Welch Allyn; Ann Nordby, Rock River Trust; Marianne Zuk, Market Street Trust Company
(Family Continuity and Governance Series)

3/8/06: Flight Risk: Aviation Emergency Response Planning
Featured Speaker: Pete Agur, The VanAllen Group
(Personal & Financial Security and Compliance Series)

3/22/06: Investing in the Global Village: Current Considerations in Private Equity
Featured Speakers: Mark Florman, Doughty Hanson & Co; R.M. "Mac" Lamm, Deutsche Bank
(Wealth Preservation and Investing Series)

4/19/06: "Passing the Buck?": What Every Family Office Should Know About Reinsurance
Featured Speakers: Rod Thaler, Willis Re; Jim Jameson, Willis Private Client; Allan Goldstein, The Insurance Design Center, LLC
(Personal & Financial Security and Compliance Series)