Two of Arnerich Massena’s senior analysts — Arthur Coyne, CFA and Bryan Shipley, CFA, CAIA — were featured in the 2015 Wealth Management & Financial Services Guide issued by The Portland Business Journal. In recognition that the CFA designation is the most widely regarded credential in the global financial industry, the CFA Society invited its members to provide articles for Business Journal readers. Among 14 pieces, two came from Arnerich Massena analysts.
Arthur’s article, “Thematic Investing: Not your Daddy’s Portfolio,” discusses a shift in the way investors are looking at asset allocation, with more focus on dynamic investment themes and less focus on traditional asset classes. “For investors looking to build and preserve wealth in this environment, it may be time to re-draw the lines of investing and take a different approach than the traditional asset allocation most of our fathers employed.” Coyne suggests that demographic and geopolitical shifts are creating thematic opportunities in areas like sustainable technology, life sciences, and trade globalization. By identifying the top-down macroeconomic drivers, investors can take advantage of these opportunities. While this shift won’t happen overnight, Coyne notes, “If you remember rotary telephones, black and white TV, and rock ’n’ roll with real drums, you know firsthand how quickly things change.”
“Time out for investor bad behavior,” Bryan’s piece, illustrates the shortfalls of how humans process information when it comes to investing. He takes a look at Morningstar’s “Investor Return,” which shows a dollar-weighted rather than time weighted return, measuring the return investors actually earn in a fund based on investor inflows and outflows. And it turns out that investors aren’t very effective at capturing the true returns offered by their chosen investment strategy! “For example, one of the top mid cap value funds had, as of April 30, a 10-year total return of 10.1%, but an investor return of only 5% over the same time period — half the return.” Shipley suggests that investors need to be prepared to make unemotional and often counterintuitive decisions in order to invest strategically, looking forward rather than focusing on past performance.
You can find the articles from Arnerich Massena analysts in the July 17 Portland Business Journal “Wealth Management & Financial Services Guide” insert or at the following links: