Foundations can take different approaches to rebalancing a portfolio, whether driven by the market, performance, or the calendar. Calendar or periodic rebalancing at specified times (monthly, quarterly, or annually)—Rebalancing can be set to return to a specific target allocation each time. It also can be set to return to an allowable range within a set... Read More
In addition to fairly consistent and often dramatic appreciation in value, real estate can generate substantial cash flow. The yield from real estate often exceeds what one can derive from fixed income securities, such as bonds or Treasury bills (T-Bills). Between 1972 and 2000, Real estate investment trusts (REITS) generated an average yield of 12.45%... Read More
The individuals responsible for managing a foundation’s assets want their investments to do well. Beyond these good intentions, however, most states maintain laws with higher standards that legally bind trustees and board members to a series of duties and responsibilities. These standards—called fiduciary duties—are commonly known as the duties of care, loyalty, and obedience, as... Read More
When crafting an investment policy statement (IPS), trustees, directors, and other decision makers should consider future fiduciary audits and thus keep compliance and accountability in mind. As an institutional investment consultant, my clients often ask for my assistance when confronted with a fiduciary audit. I use the following audit tests. Investment horizon An investment horizon... Read More
Each week, dozens of economic reports and indicators are released, providing measurements for evaluating the health of our economy, the latest business cycles, how consumers are spending, and consumers’ general outlook. Investment professionals use this information not only to explain their investment strategy, make tactical portfolio decisions, and provide context around the performance of assets... Read More
The major themes and overall lessons learned from the 2008–2009 financial crisis include issues related to the mortgage crisis, to global financial systemic risk, the concept of “too big to fail” and related bailouts, negative impacts of overuse of leverage in investment portfolios, lack of transparency at many levels, lack of appropriate risk management, and... Read More