Commodities
Should wealthy investors include commodities as part of their strategic asset allocation? What is driving the current bull market in commodities, and how sustainable is it? FoxConnects rounds up a number of contributions on the topic.
A study by Ibbotson Associates on behalf of PIMCO examines the role of commodities in strategic asset allocation. Using data from 1970 - 2004, a composite commodity index is found to produce the highest historical return of a range of bond-/stock-related asset classes. Commodities are also found to have the lowest average correlation to the other asset classes. The authors conclude that the inclusion of commodities enhances the risk-return characteristics of the efficient frontier.
- Click here to read "Strategic Asset Allocation and Commodities"
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According to SEI, high commodity valuations have been driven by both supply and demand fundamentals, as well as increased investment flows associated with the "institutionalization" of the asset class. The authors offer a cautious view over the near term, based on pressures arising from dynamics of the global business cycle.
- Click here to read "What's Fueling the Commodity Freight Train?"
A research note by UBS examines the case for commodities, with detailed commodity reviews in the areas of energy: base metals, precious metals, steel and raw materials, and other materials. It argues that, while the case for commodities has become less promising, economic development in Asia should continue to support the sector, particularly in relation to energy.
- Click here to read "Commodity Connections - Q3 2006"
A paper prepared by GFMS Limited for the World Gold Council examines the link between commodity prices and the US dollar. It also makes the case for gold as a superior hedge against the dollar compared to other commodities.
- Click here to read "Commodity Prices and the Influence of the Dollar"
- (Requires free registration to read article)
A focused investment approach to energy can, according to Greycourt, increase returns by acting as a hedge against the impact on a portfolio of rising oil prices. In a recent white paper, a number of practical ways are discussed in which to invest in energy.
- Click here to read "White Paper No. 37 - Investing in Oil & Gas"
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Investment Planning
The Benefits of Active Cash Management
Cash has traditionally been perceived as a low risk / low return asset class, often something of an afterthought in the portfolio strategies of many investors. A paper by JPMorgan Private Bank argues that cash can play a more significant role in an environment of a flat yield curve and unsettled markets and describes the value active management of a diversified cash portfolio can add to overall returns. This piece is written from a US perspective, but with arguments of generic interest to all investors.
- Click here to read "The Subtleties of Good Cash Management"
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Transparency in Commercial Real Estate Grows Worldwide
Commercial real estate has become more transparent in many parts of the world, with owners, investors and lenders demanding more information, consistent regulatory treatment and higher ethical standards. According to the latest Jones Lang LaSalle Real Estate Transparency Index, ten countries now achieve its highest "Tier 1" transparency level, up from six in 2004. Around the world, foreign investors are not at a disadvantage to domestic investors in areas such as building and planning codes, according to the authors. However, they are at a disadvantage when it comes to taxation.
- Click here to read "Real Estate Transparency Index"
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Integrated Planning
Two Views on Art as an Asset Class
FOX interviews Randall Willette, founder of Fine Art Wealth Management, to gain his view on the emergence of art funds, which treat art as an alternative asset class. Pointing to evidence of low risk-return ratios and negative correlations to other asset classes, Randall discusses why - and how - investors should look to integrate art into their overall wealth management strategies.
- Click here to read "Redefining Art Appreciation: Art as an Alternative Asset C
An academic paper published by James Pesando and Pauline Shum examines the long-term risk and return of investing in modern prints. Using data from 1979 to 2003, the authors find that, contrary to findings relating to the earlier post-war period, the real return on a portfolio of modern prints averaged just 1.22% (less than the real return on US treasury bills). They also note similar findings in relation to other segments of the art market.
- Click here to read "Investing in Art: An Updated Look at the Market For Modern Prints"
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International Trends
Japan Emergent: Is it Time to Invest?
The Japanese economy appears to be emerging from years of recession. Is now a good time to invest in the world's second largest equity market? According to a report by Ashbridge, solid earnings growth prospects and reasonable valuations support building a higher allocation to Japanese equities over time. Its paper supports the investment rationale with a discussion of the history of Japanese markets, demographics, risk, and catalysts for expansion.
- Click here to read "Ashbridge Investment Management - Quarterly Review Spring 2006"
Webcast Describes the BRICs Dream
Jim O'Neill, Head of Global Economic Research at Goldman Sachs, introduced the acronym "BRICs" to the world back in 2001, with a view that they would become major world economic powers by 2050. Here O'Neill presents a webcast discussing progress made by each of the BRICs countries (Brazil, Russia, India and China) and putting forward the argument that the next decade is likely to be the peak for global GDP growth, driven in large measure by the economic expansion of the BRICs.
- Click here to view the webcast
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Business Owner Issues
Two Immigration Alerts
Greenberg Traurig has issued two immigration alerts of interest to employers. They relate to measures undertaken by the Department of Homeland Security: one on worksite enforcement, the other on electronic signature/storage.
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Click here to read the "Department of Homeland Security Proposes Federal Regulations Aimed at Improving Worksite Enforcement"
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Click here to read the "Department of Homeland Security Publishes Interim Regulations Relating to Electronic Signature and Storeage of Form I-9"
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Family Continuity & Governance
Questions and Respect Key to Family Unity
Charles Collier, author of Wealth in Families, argues that the art of asking essential questions is the key to family cohesion. According to Collier, the most important things in a family are a sense of purpose, meaning, and identity. To him, the key question is: "What role does money play in their life journey?"
Dr. Sara Lawrence-Lightfoot argues the importance of respect (what she describes as carrying empathy, trust and communication among equals) within the family. How can families cultivate respect? "It's more about doing and embodying than it is about telling and teaching."
- Click here to read "Respect in Families: An Interview with Sara Lawrence-Lightfoot"
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Strategic Philanthropy
Two Newsletters Address Not-For-Profit Organizations
A newsletter by Moss-Adams deals with a variety of issues confronting not-for-profit entities, including: the risks of computer-based scams and identity theft, the impact of an IRS crack-down on charitable donations, and strategic planning techniques.
- Click here to read "The Tax Exempt News"
The latest issue of Philanthropy Matters, published by the Center on Philanthropy, examines issues including cost ratios for non-profit organizations, and the impact of disasters on non-disaster giving. It also includes a map describing regional differences in charitable giving.
- Click here to read "Philanthropy Matters - Giving Insights for Nonprofits"
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Managing Risk and Liability Exposure
Business Continuity Management - Best Practice for Hedge Funds
As investors increasingly make use of hedge funds, a paper by the AIMA offers practical encouragement to all participants to build, test and review their contingency plans. The aim is to ensure continued smooth operations under exceptional circumstances. Major incidents in financial centers are often accompanied by big market moves, increasing the need to continue to trade.
- Click here to read "Guide to Sound Practices for Business Continuity Management for Hedge Fund Managers"
Hurricane Management Risk Checklist
Hurricane season is from June through November and is now upon us. The following checklist is intended to be a diagnostic tool to help prepare and ensure your clients' or family's safety. Taking preventative measures now will also help to minimize damage to property and valuable possessions.
Hurricane Management Risk Checklist
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Lifestyle Management
Resisting the Seductions of Success
"Success works as a psychological and emotional aesthetic. Its victims don't know their inner lives have shrivelled and their healthy instincts have grown dull". Joseph Badaracco of Harvard Business School examines the potential psychological hazards of success, drawing parallels to the main protagonist in the novel I Come as a Thief by Louis Auchincloss.
- Click here to read "Resisting the Seductions of Success"
Spending Habits of the "New Jet Set"
Membership of "the New Jet Set" is determined by outright or fractional ownership of a jet, the new accessory of the extremely wealthy, so claims Russ Alan Prince in his analysis of the spending habits of the wealthy. The report includes insights into the luxury consumption patterns of three "personalities": Trendsetters, Winners, and Connoisseurs.
- Click here to read "The New Jet Set - A Psychographic Analysis of Luxury Spending"
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Technology Trends
Key Trends in Grants Management Software
A presentation by Information Age Associates examines grants management software and services: the major suppliers, trends in demand and supply, and key questions for decision makers to address. It also includes a look at emerging technologies that will impact foundation information systems.
- Click here to read "Grants Management Software: Choosing the Right Integrated System for Your Foundation"
- Click here to see a chart describing the products and services offered by some of the major vendors of integrated foundation systems and services
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Family Education
Secrets of Happiness - From 1902
Language, style and customs may have moved on over the last century, but have the dynamics behind being happy also moved on? A recent e-book contains lla Wheeler Wilcox's "The Heart of the New Thought", originally published in 1902. The book comprises 31 short chapters on topics such as "Old Clothes," "Eternity," "The Philosophy of Happiness".
- Click here to read "The Heart of the New Thought"
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