Insights to Shape Your Portfolio Strategy

In today’s volatile global landscape, understanding geopolitical dynamics is more critical than ever for informed investment strategies. Recent trends show a structural shift towards greater geopolitical risk, and savvy investors are integrating geopolitical analysis to navigate these uncertainties and seize opportunities. At Sage Raven Advisors, we specialize in decoding these complex dynamics. With my extensive experience advising high-level decision-makers, from the battlefield to the White House, I can help you stay ahead of the curve. Savvy Investors: 1. Integrate Geopolitical Analysis: Leverage insights about future policies, government incentives, and priorities to make better-informed investment decisions. 2. Anticipate Regulatory Shifts: Stay ahead of changes that can impact market dynamics by monitoring geopolitical moves and countermoves. 3. Diversify Geographically: Mitigate risks by investing across different regions with different risk profiles. 4. Identify Emerging Markets: Capitalize on new opportunities in geopolitically favorable regions by mapping the geostrategic landscape. 5. Enhance Risk Management: Protect your portfolio and avoid unforeseen geopolitical events by applying geopolitical intelligence to your risk management strategies. Savvy Geopolitical Advisors Offer Insights Into: 1. Supply Chain Resilience: Evaluating geopolitical risks to determine the resilience of global supply chains and ensure business continuity. 2. Technological Advancements: Understanding the geopolitical implications of technology trends to identify investment opportunities in innovation-driven sectors. 3. Energy Security: Monitoring geopolitical shifts in energy markets to capitalize on transitions and disruptions in global energy supply and demand. 4. Cultural and Social Dynamics: Analyzing the impact of cultural and social changes driven by geopolitical events to forecast consumer behavior and market trends. 5. Sovereign Debt Risks: Assessing the stability and fiscal policies of nations to make informed decisions about sovereign debt investments and currency exposure. Ready to future-proof your investments? Let’s connect and explore how geopolitical insights can drive your success. #Geopolitics #Investing #RiskManagement #StrategicPlanning

Financial advisers have lost the art of this simple but important service that more than pays for their fee. What’s it? Investment management & counseling. A few yrs into my career as a financial advisor, I was lost and on my way out. I had tried multiple approaches to active management—stock picking, past performance, the 5-star manager, etc.; nothing seemed to work. Fortunately, I came across a copy of William Bernstein’s The Intelligent Asset Allocator, which introduced me to an entirely different way to invest. First, the evolution away from active investing towards indexing, then, the just-as-significant evolution to small cap & value based “asset class investing”. A globally diversified portfolio with small value stock tilts? It was almost unheard of at the time and is only slightly more well known today, 25 yrs later. Managing portfolios like this, I thought, here’s a service I could offer clients that was of genuine value. This single insight saved my career. In some ways, investing today is going backwards. We’re told basic indexing is a perfectly appropriate approach. Holding a more diversified asset class portfolio is just a niche alternative for those still looking to get one over on the market. Not true. We once thought a market portfolio was all you needed, coupled with a bond fund in the right circumstances. But this was before the discovery of small cap & value factors. And then profitability. Modern, state of the art portfolios are not cap-weighted. They’re small/value/profitability tilted. Cap weighting is old school & outdated. Excessively concentrated in large growth stocks. Not security selection & timing outdated, but not far behind. Investors and many advisors still haven’t got the memo. As far back as we can go, a small/value tilted US stock portfolio outperformed the market by 2%/yr. A significant improvement that would be meaningful for all investors. When you tack on not allocating excessively to stable but low returning short-term bonds, you realize an asset class-based advisor’s main service—managing an equity-oriented, small/value/profit tilted investment portfolio—is not a commodity, it’s an incredibly valuable service. Next add ongoing management & counseling—keeping the asset class portfolio in balance & the investor confident and disciplined, avoiding the 1-2% bad-timing “behavioral gap” (source M*) that investors typically pay, and you’ve got an additional source of value that the asset class-based advisor’s main service can provide. Why don’t you hear this more often? Why don’t advisors make their case based on the simple, straightforward investment management & counseling service? Most advisors don’t invest this way, sadly, and for those who do, I guess financial planning is easier to sell. I’m all for financial planning, don’t get me wrong. But managing portfolios & managing investor behavior should be at the core of what advisers do. A better investment experience is where the real value is.

I sat down with Mergermarket and CIO/host Giovanni Amodeo to share my thoughts on "the evolution of private assets in family offices allocation" "Michael Ashley Schulman, CIO and Founding Partner at Running Point Capital (a multifamily office), shares his journey from a childhood stock trader to a seasoned investment strategist. Schulman offers deep insights into the evolving landscape of private assets and how affluent families are navigating #wealthmanagement in today’s complex financial environment." Key Themes & Takeaways 1. The Evolution of Private Markets—Over the past two decades, private markets have matured Growth in #privatecredit, #secondaries, #venturecapital has diversified investment opportunities 2. Family Office Trends—Families typically enter Running Point with 0–5% allocation to private assets A 20–40% allocation can be tailored to each family’s goals and risk tolerance Transitioning to higher private allocations is gradual and opportunity-driven 3. Education Beyond Investments—The real education lies in understanding family priorities, not just asset classes Emphasizes building a holistic financial picture—including assets, liabilities, lifestyle goals, and legacy planning Investment strategies are likened to choosing a route on Google Maps: scenic, fast, or off-road—each with its own risk and reward profile 4. Volatility vs. Real Risk—Distinguishes between market noise and true financial risk Real risk is the inability to meet liabilities, not daily price fluctuations Cash flow is king—especially in private investments that generate income despite being illiquid 5. Private Credit: A Deep Dive—Private credit is a broad category that can mean multiple things Favors opportunistic, covenant-heavy private credit that offers equity-like returns with less risk He also has a strong understanding of #CLOs (Collateralized Loan Obligations) from his time at Deutsche Bank 6. Manager Selection Criteria—Four pillars for evaluating investment managers: Smart: Deep expertise and insight Niche: A clear area of specialization Systems: Robust infrastructure and risk controls Selection Process: A rational, explainable investment methodology 7. Tax Optimization Strategies—Tax planning can yield more value than investment returns Highlights Private Placement Life #Insurance (#PPLI) as a powerful tool: Tax-free compounding Access to bespoke investments (e.g., private credit, hedge funds) Multi-generational wealth planning Liquidity options through borrowing or withdrawals 8. Psychology of Wealth—Families should be sensitive to taxes, more than fees or returns Structuring investments to minimize tax impact is a priority 9. The Future of Wealth Management—Rise in single-family offices is outpacing talent availability Multi-family offices will grow, but true holistic firms remain rare Industry is seeing consolidation driven by #privateequity and economies of scale Sees value in boutique firms that offer personalized, proactive service

📈 Volatility-Managed Portfolios Hello #FinanceCommunity, This paper by Moreira and Muir on volatility-managed portfolios warrants your attention. The authors challenge prevailing assumptions about risk and return, finding that certain volatility-managed portfolios can offer higher risk-adjusted returns. This runs counter to long-held theories. 🔑 Key Takeaways: 1️⃣ Risk-Adjusted Returns: The paper introduces a strategy that scales monthly returns by the inverse of their previous month's realized variance. This simple yet effective approach can significantly improve alphas and Sharpe ratios. 2️⃣ Contrarian Approach: Interestingly, the strategy advises taking less risk during high-volatility periods, including recessions and financial crises. This is contrary to the popular belief that these are the times to take more risks. 3️⃣ Utility Gains: The strategy offers substantial utility gains for mean-variance investors, making it a robust and profitable approach. 4️⃣ Challenges to Existing Models: The findings pose a challenge to representative agent models and macro-finance models, suggesting that an investor’s willingness to take stock market risk must be higher in periods of high stock market volatility. 5️⃣ Robustness: The strategy is robust to realistic transaction costs and leverage constraints, making it practical for real-world implementation. If you're interested in asset pricing, risk management, or portfolio optimization, this paper is worth a read. It not only offers actionable insights but also opens up new lines of inquiry in the finance research community. #Finance #AssetPricing #RiskManagement #PortfolioOptimization

Why do Family Offices Focus on Structural Alpha AND Investment Alpha? Traditionally, investors have focused on investment alpha, the extra return achieved through superior asset selection. However, Family Offices—private wealth management firms serving ultra-high-net-worth individuals—are increasingly prioritizing structural alpha, which emphasizes optimizing asset location to enhance returns. Investment alpha is achieved through active management, stock-picking, and market timing, and remains the primary focus for most investors. Structural alpha, on the other hand, derives from strategically placing assets to maximize tax efficiency, minimize costs, and enhance overall portfolio performance. This involves leveraging various financial structures, legal entities, and jurisdictions. Family Offices focus on structural alpha for several reasons: 1. Long-Term Perspective: Family Offices manage wealth across multiple generations, necessitating strategies that sustain and grow wealth over decades. Structural alpha aligns with this long-term outlook by focusing on wealth preservation and growth. 2. Cost Management: Structural alpha involves meticulous cost management. Family Offices can negotiate lower fees due to their substantial asset bases and implement cost-saving strategies like direct investing and co-investing. 3. Customized Solutions: Family Offices provide bespoke solutions tailored to the unique needs of each family. This customization extends to structural alpha strategies, where asset location decisions are made based on individual family circumstances and long-term objectives. 4. Holistic Wealth Management: Unlike most investors, Family Offices adopt a holistic approach to wealth management, integrating estate planning, philanthropy, and legacy planning. The emphasis on structural alpha by Family Offices represents a strategic shift that goes beyond mere asset selection. By optimizing asset location, these entities achieve significant tax efficiencies, reduce costs, and tailor solutions to their unique needs, ensuring long-term wealth preservation and growth. While most investors chase investment alpha, the insights from structural alpha strategies offer a compelling case for a more holistic and strategic approach to wealth management. This focus on structural alpha underscores the sophistication and forward-thinking approach of Family Offices, setting a benchmark for other investors seeking sustained financial success. Graph: - Tax Savings Over 20 Years: Structural alpha strategies result in significant incremental tax savings, showcasing the benefits of optimizing asset location for tax efficiency.

Ever since we transformed financial docs into machine readable formats, I can see the industry from a much clearer lens and focus on the data, not the noise The dust has settled on the March 31st Form ADV updates, with over 12,000 SEC-registered firms (87%) finalizing their filings. The data reveals a significant transformation in wealth management... But what truly caught my eye? The decisive pivot towards ALTERNATIVE INVESTMENTS. Consider these insights: Average RIA allocation to alternatives is now hovering around 5.8%. More impressively, over 100 firms are now allocating north of 25% to alternatives – these are significant, strategic moves. Perhaps most compelling for growth discussions: there appears to be an emerging correlation between firms' 1 & 3-year CAGR and this increased embrace of alternatives. Performance driving alts, or alts driving performance? And in a specific nod to future growth bets: RIAs investing in Venture Capital funds saw a 12.5% year-over-year increase. 🚀 For my colleagues that partner with RIA's: This isn't just statistical noise; it's a clear signal. The dynamics within the RIA firms you cover are actively evolving. Are you digging into which firms are making these allocation shifts and why? How does their expanded toolkit for clients (now including more private markets, VC, etc.) change their needs and your engagement strategy? Is your value proposition resonating with firms that are clearly looking for differentiation and new growth levers? Now is the time for a deeper dive. Understanding these nuanced shifts isn't just beneficial—it's critical to effectively partner with and support these evolving RIA practices. What trends from the ADV updates are you focused on? How is this reshaping your approach? #WealthManagement #RIA #Distribution #AlternativeInvestments #FormADV #VentureCapital #PrivateMarkets #FinServ #BusinessDevelopment #SalesStrategy #InvestmentTrends #FinancialServices

The modern #wealthmanagement industry was built on the premise that #diversification should improve risk-adjusted returns. This premise drove the spectacular growth of #privateequity, #privatecredit, #hedgefunds, #reits and other "diversifiers." In reality, most diversifiers are highly correlated to either #stocks or #bonds. The chart on the left shows how most strategies have been highly correlated either stocks (upper left) or bonds (lower right). The diversification playbook, in essence, was more about bolstering the two legs of the asset allocation stool rather than building a third leg. In a higher #inflation world, though, stock and correlations have been, and are likely to remain, positively correlated. Consequently, traditional assets and diversifiers are moving up and down in tandem -- see right chart. This explains why the standard deviation of a typical "diversified" portfolio has doubled in five years. To address this, we believe the wealth management industry needs a new playbook -- one that prioritizes finding diversifiers, like #ctas and some #commodities , that have low correlation to both stocks and bonds over time. If you want to see where managed futures would sit on the charts below, please visit https://lnkd.in/eskt_Wm2

📊 How much of one stock is too much for your portfolio? Here's a reality check for those of us with concentrated positions: While individual stocks have seen incredible gains (some up 15-35X in the last decade), our research shows a sobering truth: only 27% of individual stocks outperform the market long-term. Here's a framework we came up with at Cache: 🟡 10-25%: Pushing your luck 🟠 25-50%: Tempting fate 🔴 50-75%: Playing with fire 🥵 75-100%: Going #YOLO Before holding onto that concentrated position, ask yourself: 👉🏽 Could you stomach a 30-60% drop? 👉🏽 Do you want to minimize regrets and heartburn? 👉🏽 Would you run into financial trouble if a black swan event were to occur? 👉🏽 Is this also your employer's stock? Read the full article to learn more about various tax-efficient diversification strategies: https://lnkd.in/g_iNViRx What's your take on portfolio concentration? #Investing #WealthManagement #StockMarket #PortfolioStrategy #FinancialPlanning