Tag Archives: Investments

Business Articles, Wealth Management

“Basic Asset Allocation For Portfolio Management”

What is Asset Allocation? How do Portfolio’s take shape with investment choices? And how do Investment Advisors, CFP’s, and Wealth Management, Asset Managers, Fund Managers use Asset Allocation? All good questions! Todays article is for you. This is a very broad topic. And there are many moving parts. This post is meant to give you a better top down view into how “Financial Advisors, and Asset Managers Allocate Assets to Fictional Portfolios. And the process” This post should not be used as personal or professional Investment Advice.

Interestingly I am learning a ton as I continue to study the fine art and processes of Wealth Management, and earning my License as a Independent Financial Advisor. One of the latest Youtube Channels I have been listening to is Family Office Club, they do touch on Asset Allocation and so do several Podcasts I have listening to in my spare time.

Investment Advisor Podcast

Back to me listening to Podcasts. One of the Podcasts I highly recommend is Money for the Rest of Us. Hosted by experienced Institutional Investment Advisor J. David Stein. In all this content you can be sure to hear Tax Optimization, Retirement, Investing Smart, and Asset Allocation for large and small family portfolio’s and a ton more. In todays article I am going to demystify a bit “How Financial Advisors grow, protect, and leverage investment opportunities while deciding “How much and where to Invest their Capital?”

Another Podcast which is a Favorite? My Friend Andy Flattery who is a CFP in Kansas City who operates Simple Wealth Planning. His Podcast? “The Reformed Financial Advisor”

Blackstone Investment Choices For Investment Advisors

Before I continue, I would like to introduce Blackstone’s Investment Vehicles for Investment Advisors Clients. Blackstone Alternative Investments for Investment Advisors Clients Portfolio’s is a very smart choice. Blackstone’s investment products and Investment Vehicles continue to produce above normal returns. And this fact is one of several reasons why Blackstone is my go Alternative Investment Product list.” Here Joan Solotar to share more about why Blackstone’s Portfolio Investment Vehicles just makes since.”

“How do Financial Advisors Allocate Capital For Investments?”

If your reading my article? I am positive I know what your thinking? “How do Financial Advisors Allocate Capital and make Investment Choices?” This is where working closely with a Licensed Financial Advisor starts to pay dividends.

Maybe your a Entrepreneur that has had a recent liquidity event? Maybe your a Executive that has had a Exit Opportunity moving towards you on your professional Horizon? Or Maybe? Your a NFL, NBA, or a Music Artist who needs to know your options and what comes next? And you have questions. Well this post should help you with your questions, and will delve into “How Financial Advisors Manage, Grow, Diversify, and Protect your Portfolio. For the Sole Purpose of Preservation of Wealth”.

First what we would generally do? Meet face to face and learn more about each other. Maybe play golf, go on a Offshore Fishing Trip, or Ski Trip, or even you invite us to travel with you as you continue to work. After your thoroughly acquainted with the advisor of your choosing and have interviewed several other Advisors? You decide who you can trust and who is capable of protecting your assets while giving you room for growth and let’s not forget providing concierge style of extraordinary service.

Later after we begin to explore what are the most important things? Here are some questions that get us heading in the right direction. Usually we would sit down and talk about a list of questions to consider. Examples? Do you have any appetite for risk? On a scale of 1-10 “How important is preserving your principle?” On a scale of 1-10 do you require Income from your Capital? On a scale of 1-10 are you seeking to grow your capital? “What is the time horizon we need to consider?”

“Financial Advisors & Client Objectives and Recommendations”

Did you know? “Financial Advisors develop a Plan based on your goals and objectives? It’s how we begin to develop a plan as Fiduciary’s and how we consider Suitability of Securities and Investments.

Allocation of Capital

Most Investment Advisors have a list of Investment Opportunities they can allocate capital to for your Portfolio. This list is sort of unique to each Financial Advisor. Because they have done their due diligence on the offering or security. This list is unique and usually is one of the many reasons “Why” High Net Worth Families and Individuals have sought out the services of a Investment Advisor. In order for a Allocation of Capital to Happen? Financial Advisors first need to finish the financial plan to get you and your Assets into a Portfolio that has a purpose and objective. In simple terms? “We look at it like placing you into a car and getting you from Point A to Point B. We must have a financial destination.” And this is where our list of Investment Vehicles comes into the picture.

“Portfolio Asset Allocation”

Ok once we have asked Hard Questions and developed a Plan we can now begin to allocate capital to investment vehicles that have specific goals and objectives.

BONDS & CREDIT MARKET SECURITIES

Example: We may allocate 40% of your capital for Municipal or Corporate Bonds after we have carefully considered your Tax Bracket. The main reason we would use Bonds? Is because they offer a excellant opportunity to generate Income as an Investment Vehicle. Make sense? Excellent.

STOCKS

Another Example of making a Asset Allocation in our fictional Portfolio? If we have had a conversation about introducing an Equity portion into your portfolio with calculated Risk? We would begin to carefully consider using Stocks as an Investment Vehicle. Meticulously making sure we are using tools that could minimize risk of big swings in market volatility to your Stock positions. Yes we have tools that can do this. However if we are properly diversified? This can be a fantastic way to use Growth Stocks as investment vehicles to grow your Portfolio and capital.

Investment Vehicles Used For Asset Allocations By Investment Advisors

Since Asset Allocation is a complex subject. We honestly do not have enough time to write about all the Investment Vehicles and Securities we use for Client Portfolios. However here are some additional Choices we use for Asset Allocation. CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills, Real Estate Investment Trusts, Mutual Funds, Index Funds, Exchange Traded Notes, Investment Funds by Direct Participation Programs, and much more.

Asset Management Goal? Preservation and Capital Growth

Bottom line up front, I genuinely hope you learned a few things during todays Post of Asset Allocation? Todays post was meant to give a brief view for anyone who was curious how Financial Advisors and Wealth Managers divide up capital and build a fictional portfolio. This is a very general topic. Not in depth. The width of this topic is very wide. But if you ask me? One constant should always be placed a the forefront of Asset Management. “That is the Preservation of Capital” In the Grand Scheme of Investing? That is all that matters. I do hope you learned and discovered a few things today. And please reach out if you feel I could be helpful.

Thank you
JS

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Investing, Investment Adviser Arizona

Pooled Investments: What you need to know?

Today’s post will be fairly quick about Pooled Investments, Unit Investment Trusts “UIT’s”, Open End Funds, Closed End Funds, thier Management companies, ETF’s Exchange Traded Funds and REIT’s.

On my road to obtaining my Series 65 Investment Advisors License I have been learning and polishing my skills within Investment Funds. Today’s post is a quick need to know for Investors who have been curious and have been search for more detailed information about Pooled Investments? What are their uses, and how they work and more? Today’s post is what you have been searching for!

Unit Investment Trusts

In U.S. financial law, a unit investment trust is an investment product offering a fixed portfolio of securities having a definite life. Unlike open-end and closed-end investment companies, a UIT has no board of directors. A unit investment trust UIT is one of three basic types of investment companies. The other two types are open-end funds (usually mutual funds) and closed-end funds. Exchange-traded funds (ETFs) are generally structured as open-end funds, but can also be structured as UITs.

Open End Funds

Open End Funds are usually recognized as “Mutual Funds” and used as Pooled Investments. According to the SEC Website:

  • Mutual funds generally sell and purchase their shares on a continuous basis, although some funds will stop selling when, for example, they reach a certain level of assets under management.
  • Investors purchase shares in the mutual fund from the fund itself, or through a broker for the fund. Investors cannot purchase the shares from other investors on a secondary market, such as the New York Stock Exchange or Nasdaq Stock Market. The price that investors pay for mutual fund shares is the fund’s current net asset value (NAV) per share plus any fees that the fund may charge at purchase, such as sales charges or loads.
  • Mutual fund shares are redeemable. This means that when mutual fund investors want to sell their fund shares, they sell them back to the fund or to a broker acting for the fund. Investors sell their shares at the current NAV per share, minus any fees the fund may charge at redemption, such as deferred sales loads or redemption fees.
  • Mutual funds are registered with the SEC and subject to SEC regulation. In addition, the investment portfolios of mutual funds typically are managed by separate entities known as investment advisers that are also registered with the SEC.

Mutual Funds are also SEC Registered Securities and traded on the Open Primary Stock Market.

Closed End Fund

Closed End Funds are also known as Closed End Investment Management Companies like Blackstone, Morgan Stanley, Vanguard typically offer their funds to Accredited Investors and Institutional Investors. According to the SEC Website:

There are many varieties of closed-end funds.  Each may have different investment objectives, strategies, and investment portfolios. They also can be subject to different risks, volatility, and fees and expenses. Fees reduce returns on fund investments and are an important factor that investors should consider when buying shares.

Exchange Traded Funds ETF’s

The SEC Investor Website classifies ETF’s as

Exchange-traded funds (ETFs) are SEC-registered investment companies that offer investors a way to pool their money in a fund that invests in stocks, bonds, or other assets. In return, investors receive an interest in the fund.  Most ETFs are professionally managed by SEC-registered investment advisers.  

Some ETFs are passively-managed funds that seek to achieve the same return as a particular market index (often called index funds), while others are actively managed funds that buy or sell investments consistent with a stated investment objective.  

ETFs are not mutual funds.  But, they combine features of a mutual fund, which can only be purchased or redeemed at the end of each trading day at its NAV per share, with the ability to trade throughout the day on a national securities exchange at market prices.  Before investing in an ETF, you should read its summary prospectus and its full prospectus, which provide detailed information on the ETF’s investment objective, principal investment strategies, risks, costs, and historical performance (if any).

REAL ESTATE INVESTMENT TRUSTS or REIT’s

REIT’s are also pooled investments. Real Estate Investment Trusts are a “EQUITY SECURITY” and the Shares are whole shares and never fractional shares. However REIT’s are not classified like Mutual Funds. As the Investors of REIT’s typically only receive “INCOME” from their investment in the form of Rent and Mortgage Income. REIT’s are traded in the Open Stock Markets. That Tax is attractive to most and REIT’s usually have low management fee’s since they are Passively managed Assets.

Pooled Investments are all required to offer investors access to a Prospectus. And Pooled Investments are Regulated under the Securities Act of 1933 and the following Securities Act of 1934. Some are Private Investments and some are Initial Public Offerings. However this post today will not dive deeper into these topics. Later on I will writer more about IPO’s and Private Placement Memorandums and more. Stay tuned I will also be “NET ASSET VALUE” the formula to calculate Net Asset Value per share and more.

Becoming a Investment Advisor Arizona & Kansas City

I do hope you learned a little today by reading up on Pooled Investments, I am working hard towards obtaining my Series 65 NASAA Investment Advisors License and feel it’s my duty to educate other Investors and qualified individuals about the different investment opportunities out in the market place.

Thanks for stopping by and reading some of my required Investment Advisor Information I must digest. Godspeed.
JS

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