Equity investments usually consist of the purchase of stock from a publicly-traded corporation. Companies pay their investors dividends to reward their investments and the value of the stock increases with expectations of later dividends. Equity investments are usually high interest yielding but carry a larger amount of risk than more steady investments.
Large-cap equity consists of equity invested in companies with stated assets greater than $10 billion. Mid-cap equity consists of equity invested in companies with stated assets greater than $2 billion but less than $10 billion. Large-cap equities are more stable investments than other types of equity, due to the stability and permanence of large companies. Because of this, large-cap equities have less risk than other equity investments but also tend to have a lower annual return. Mid-cap equities are more risky than large-cap equities, but less risky than small-cap equities.
PIMCO Stocks Plus, Newport Beach, CA
The PIMCO Stocks Plus strategy is a classic example of “portable alpha.” The portfolio is intended to mimic the S&P 500 Index through the use of futures. Utilizing the remaining cash on-hand, the portfolio manager invests in short-term securities that ideally yield more than the derivative cost, netting slight out-performance over the S&P 500 Index. Benchmark: S&P 500.
Vanguard Index Fund, Wayne, PA
An index fund that is designed to mimic the S&P 500, a gauge of overall U.S. stock returns. Benchmark: S&P 500.
Luther King Capital Management, Ft. Worth, TX
Large Cap Value equity manager investing in U.S. based companies. The portfolio was previously benchmarked to the S&P 500; however we have given them a new mandate (Russell 1000 Value index) and they have adjusted the portfolio accordingly. Benchmark: Russell 1000 Value.
Artisan Growth Fund, Milwaukee, WI
Large Cap Growth driven fund that primarily invests in US equities and non-US companies located in developed and non-developed nations through the use of depository receipts. The fund invests in companies with a market capitalization of at least $3 billion. The investment seeks to achieve maximum long-term capital growth.
Small Cap equity consists of equity invested in companies with stated assets less than $2 billion. Because of the greater risk associated with investments in smaller businesses, companies reward their investors with higher annual returns, on average, than large more stable companies.
Advisory Research, Chicago, IL
Small/mid Cap domestic equity manager focusing on value-oriented companies. The team, led by Brian O’Brien looks for under-valued companies that have potential for future earnings. Benchmark: Russell 2500 Value.
Vanguard S&P 600 Index Fund
Invests in stocks in the S&P Small-Cap 600 Index, representing 600 smaller U.S. companies. Focuses on closely tracking the index’s return, which is considered a gauge of overall U.S. small-cap stock returns. Offers high potential for investment growth; share value rises and falls more sharply than that of funds holding bonds. More appropriate for long-term goals where your money’s growth is essential.
International equity is equity invested in any company chartered outside of the United States. It can refer to either established international markets, which exhibit slower growth but lower risk (for example European markets), or emerging international markets, which exhibit faster growth but greater risk (such as China and Russia). Investments in international equity decrease a portfolio’s overall risk by decreasing exposure to purely national crises.
Marathon-London International Investment Trust I
International Equity strategy with a focus on quality companies with strong balance sheets and improving growth attributes. The strategy will invest primarily in Non-US equities in developed countries but can invest as much as 10% in emerging countries.
Artisan International Value, Milwaukee, WI
Portfolio invests in non-U.S. equities in both developed and emerging countries. Emerging market consists of typically 10-20% of the portfolio. The team came out of Harris Associates and carries many of the same value-based investment themes in this portfolio. Benchmark: MSCI EAFE Value.
Emerging markets equity are listed equity securities traded on emerging non-U.S. markets. Emerging markets are defined as any market that is not included in Morgan Stanley’s EAFE index plus Canada.
Highclere International SMID
Highclere will invest in small to mid-capitalization companies within the emerging market equity space. The team at Highclere will apply a fundamental bias to stock selection, holding 40-60 names at any given time.
Aberdeen Emerging Markets, Philadelphia, PA
The Fund invests primarily in developing countries located in regions such as Asia, Latin America, Eastern Europe, the Middle East, and Africa. The portfolio seeks long-term capital growth by investing primarily in equity securities of companies located in these regions. Benchmark: MSCI Emerging Markets.
Bond investments are investments in debt owed by corporations or governments. Corporations or government will sell bonds to investors. These bonds make interest payments (usually annually or semi-annually) and at maturity will make a large payment at the face-value of the bond. Bonds make a great addition to portfolios because they offer steady returns.
Domestic Bonds are bonds sold by U.S. based companies and governments. These bonds are low-risk, and provide a steady stream in interest to any portfolio.
Vanguard Short Term Bond Index
This index fund offers a low-cost, diversified approach to bond investing, providing broad exposure to U.S. investment-grade bonds with maturities from one to five years. Reflecting this goal, the fund invests about 30% of assets in corporate bonds and 70% in U.S. government bonds within that maturity range. A key risk of the fund is the fact that changes in interest rates can eventually lead to a decrease in income for the fund. Investors with a short-term savings goal who are willing to accept some price movement may wish to consider this fund.
Loomis Sayles Core Bond Plus, Boston, MA
A Bond fund that seeks income as well as stability of principal by investing at least 80% of its net assets in investment-grade bonds. The fund also has the flexibility to invest up to 20% of total assets in higher-yielding securities. Benchmark: Barclays Capital Aggregate.
Global bonds are bonds issued from companies and governments outside of the U.S. These bonds are riskier than domestic bonds, but usually provide higher interest rates.
Colchester Global Bonds, New York, NY
Colchester invests in non-U.S. government bonds as well as U.S. based fixed securities (most often TIPS). The portfolio will also hedge various currencies in order to capture desired exposure. Note: the fund only buys sovereign debt; therefore no credits, etc. Benchmark: Citigroup World Government Bond.
High yield bonds are bonds issued by companies considered to be a risky investment. As a result, these bonds pay very high annual interest rates.
Sankaty Senior Loan Fund, LP, Boston, MA
Senior bond portfolio primarily made of floating rate debt with small allocations to high yield issues. Sankaty will hold approximately 100-110 issues at any given time.
Oaktree High-Yield Fund, LP, Los Angeles, CA
The high yield strategy at Oaktree is led by a quality team of analysts focused on identifying credits that are at low risk of default, generate positive cash flow and provide attractive yields for the risks taken. The portfolio will be fully allocated to below investment-grade corporate debt.
Alternative investments cover a broad array of investment strategies and include commodities such as oil, real estate and hedge funds. Alternative investments help to even out a portfolio by reducing its exposure to inflation.
Hedge funds are low-risk funds which achieve very low volatility by “hedging” their bets. Hedge funds create a minimal-risk investment by choosing an investment with particular strengths and weaknesses and then investing in an investment with opposite strengths and weaknesses - in this way, the investments off-set part of each other’s risk.
Mason Capital, New York, NY
Hedge fund that seeks to achieve attractive capital appreciation over time, relatively independent of the returns of the overall equity and debt markets, by the use of a variety of investment strategies, but principally by employing three event-driven investment strategies: merger arbitrage, distressed securities, and special situations.
Wellington Pagosa, Boston, MA
Hedge fund - Pagosa is a multi-strategy fund-of-hedge funds that seeks attractive risk-adjusted returns through diversified exposure to hedge funds offered by Wellington Hedge Management. The fund is structured with an emphasis on strategies with low or variable beta exposure to traditional asset classes.
Luxor Capital Partners, New York, NY
Hedge fund utilizing a fundamentally driven research effort, the portfolio follows an opportunistic approach that allows it to use multiple strategies and to invest across the capital structures of U.S. and non-U.S. companies.
Forester Offshore, Greenwich, CT
Hedge fund of funds containing multiple underlying long/short strategies. Benchmark: HFRI Equity Hedge Index and S&P 500.
Real assets are investments in material assets.
PIMCO Commodity Real Return, Newport Beach, CA
The PIMCO Commodities strategy is a portable alpha structure that is intended to mimic the DOW UBS Commodities Index through the use of futures. Utilizing the remaining cash on-hand, the portfolio manager invests in TIPS that ideally yield more than the derivative cost, netting slight out-performance over the Dow UBS Commodities Index. Benchmark: DJ UBS Commodity Index.
Van Eck Global Hard Assets Fund, New York, NY
Seeks long-term capital appreciation by in investing primarily in hard asset securities. Benchmark: DJ UBS Commodity Index.
Flag Energy & Resource Partners II / Flag Real Estate Partners II, Stamford, CT
Invests in portfolios of leading capital managers and fund-of-fund strategies that include private equity and real assets. Benchmark: Europacific Growth Fund.
Aether Real Assets, Denver, CO
Private Real Assets Fund of Funds – Portfolio of diversified funds that will cover Energy, Agriculture, Mining, Timber, etc. Investments will be global but primarily in North America.
Och-Ziff Real Estate III,
Private Real Estate fund – the team at Och-Ziff will invest primarily in the US via a well-diversified basket of real estate opportunities. These include both traditional and non-traditional opportunities in this space.
Denham Commodity Partners VI, Houston, TX
Direct private real estate fund that invests in industries, companies or assets involving Oil & Gas, Metals & Mining, and Power & Re-newables. The fund will target global opportunities across all stages of the company or asset life cycle and all segments of the capital structure. Benchmark: Europacific Growth Fund.