Change in Custody Rule for Assets

A No Action letter released by the SEC in February 2017 clarified its interpretation of the rule1 for asset custody. Quoting from a précis on the subject prepared by Fidelity Investments: The SEC has clarified that an adviser who has the power to disburse client funds to a third party under a standing letter of… Read more »

Observations on Risk Tolerance and Risk Capacity

The famous Temple of Apollo at Delphi—an important source of prophetic wisdom for the ancient Greeks—is well known for the two inscriptions on its portal: Know Thyself Nothing in Excess As several world capital markets continue to flirt with record high asset price levels, it is worth revisiting Delphic wisdom in order to prepare for… Read more »

Cooking up a Diversified Portfolio

A diversified portfolio owns securities from various markets – the bond market, the real estate market, and the stock market. Additionally, a diversified portfolio benefits from geographic diversification. This means that it typically owns both U.S. and foreign securities. By contrast, a “focused” portfolio owns only a few securities – often within just one market…. Read more »

Diversification Through Time

Investors have two basic options. They can concentrate their portfolios – in, say, the S&P 500 or U.S. Treasuries, or real estate – or they diversify broadly over a weighted cross-section of global stocks, bonds and real estate. Which strategy is more likely to produce better long-terms results? Which strategy is less risky? To investigate… Read more »

Investment Themes: Fact or Fiction?

If you watch financial TV programs or read articles in the newspaper’s business section, you may notice an emphasis on “investment themes”. What investment themes will likely generate better portfolio returns? Will political themes outweigh economic themes? Will high corporate earnings boost investor sentiment; or, will high unemployment cast a dark shadow over investors? Investment… Read more »

What Investors and Trustees Should Know about Investment Advice

Is professional financial advice harmful? This article reviews and evaluates the current state of the U.S. Financial Advisory Profession. It cites findings from academic and governmental regulatory agency sources indicating that the profession is rife with conflicts of interest, abusive practices, and even outright fraud. This is not a matter of “a few bad apples;”… Read more »

A Gentle Introduction to Investing

How can people make good investment decisions when they don’t know the difference between a stock and a bond? Many beginning investors are intimidated by the prospect of learning about economics and finance – subjects that, for many, are deadly dull – or of meeting with salespeople trying to push investment products and schemes, or… Read more »

Investment Quarterly and Fiduciary Forum

Below is a collection of past issues of our Investment Quarterly and Fiduciary Forum.   Investment Quarterly   Investment Quarterly 1999 Q4 Diversification versus New Paradigm Investing Variance Drain: Maximizing Return May Be Hazardous to Your Wealth Portfolio Allocation and Risk Loading Factors Investment Quarterly 2001 Q1 The Great Debate: Behavioral vs. Standard Finance Predictability… Read more »

Money Market Reform: What You Should Know

The ubiquitous money market mutual fund has been a hot topic at the U.S. Treasury Department and the Securities Exchange Commission (SEC) since the Great Recession and Financial Crisis of 2008/2009. The Government’s concerns are based on actions taken by institutional investors during the crisis when a large institutional money market fund could no longer… Read more »