Initial thoughts on Trump’s win

Genevieve Signoret

Letter from Queretaro

Feeling sober

We believe that the world has changed. We are watchful and studious, bent on figuring out what exactly is emerging, in particular in Washington DC.

We’re encouraging clients to think and act slowly, execute risk management plans methodically, bear in mind their investment horizons (ward off wasteful anxiety over short-term market fluctuations), and get to work understanding the new world that is emerging.

Admittedly, we’re feeling sober. Back in 2001, we chose the name TransEconomics to evoke our commitment to stretching and reaching across divides: discovering and seizing on cross-border investment opportunities; understanding and decoding for clients the transnational ecosystems we all invest and produce in, love and thrive in; and building a corporate culture that bridges social, gender, racial, linguistic, and gender gaps. Sobering us is a sense that our company’s most deeply held values are under attack.

At the same time, we take some comfort in a job well done. We believe strongly in our multi-scenario approach to portfolio construction. In building our downside risk scenario, called Trigger-Happy, we envisioned a Trump victory. Then, for each client investment horizon, we revamped portfolio strategies to seek wealth protection and growth over that same horizon should global risks materialize. Among other things, this involved taking substantial long positions in U.S. Treasury securities, increasing client exposure to non-USD developed-market currencies and, for clients with short-term investment horizons, bulking up client holdings of U.S. dollar cash.

We hold to our portfolio strategies and in client portfolios are taking no emergency market actions except in accounts with new cash in, where we’re swooping up bargains.

What we know and do not know and our immediate task

We know that the forces of xenophobic nationalism, anti-rationalism, authoritarianism, anti-institutionalism, racism, and misogyny—in short, fascism—are about to enter the White House under the auspices of the Republican Party, and that said party will continue to control the U.S. Congress.

We know that Donald Trump is ruthlessly pragmatic and competitive. That he has never held office before and is deeply ignorant of how government works. That he places no value on anyone or any ideal besides winning, his own wealth, and his own fame. That’s he’s charismatic and is an extraordinarily powerful communicator. And that he speaks to the deepest fears and longings of American whites, especially men, especially those who live outside of cities, are older than 45, earn more than $50,000/year, and are uneducated. He´s beloved by white supremacists.

We perceive Vice President-Elect Mike Pence to be competent and devoted to public service.

We suspect but do not know whether the U.S. constitution will come under attack.

We perceive the U.S. Supreme Court to be non-partisan vigilant upholders of the Constitution.

We do not expect but do not know whether Trump’s self interest will lead Trump to become conciliatory, empower Pence, and generally choose a competent team and delegate the running of government to its members.

We do not know how smooth will be Trump’s relationship with the Republican-dominated Congress. The party is factitious and many in it fear Trump and are ashamed of him.

Our immediate task is to discover the innards of the new U.S. Congress and watch who Trump will put on his team.

On ethics and the management of wealth held in common with others

It should be clear to you all that I believe that to protect and grow our assets is the responsible thing to do. It is our mission at TransEconomics, one I’m proud of.

But of course a vast portion of the wealth we hold we hold not privately but in common with others—people alive today and people not yet born. And thus we’re called to protect and grow these commonly held riches too, assets such as freedom, peace, opportunity, solidarity, fairness, transparency, and of course our natural resources.

This means that we must work for the common good, not only manage global risks but also work to avert them, resisting anti-scientism and dangerous extremism.

And so today I look inward. I question every personal and work habit, ponder all details of my resource allocation.

I’m proud of my devotion to leading this firm in skillful private wealth management, but today I sharply ask myself whether I always show equal fervor in protecting our planet and building a wealth of opportunity, justice, democracy, and inclusion for all in this gorgeously diverse world.

Comentarios: 1 comentario.

Opportunities in U.S. commercial real estate for Latin American investors

John Greenman

Letter from Denver

In this blog post, we comment on a Special Foreign Investment Report titled Foreign Investment in U.S. Real Estate Remains Elevated; Capital Preservation and Stability Often Prioritized Over Yield from the research group at Marcus & Millichap (M&M), a U.S. brokerage company specializing in commercial real estate investment sales in the so-called “private market” (the market for transactions amounting to $10 Mn or less).

We concur with the report’s contention in its headline that foreign investors often tend to seek different qualities in their U.S. real estate investments than do their domestic competitors, valuing capital preservation and stability over yield, but we would add that this different acquisition profile provides the foreign investor with an advantage in today’s market. Right now, although supplies of higher-yielding, short-term holding opportunities have largely dried up, those of higher-quality stabilized assets abound. This niche is best for buyers who have longer investment horizons. International capital can fill this niche.

We also concur with the report’s observation that, notwithstanding the newsworthy multi-billion-dollar property acquisitions by a handful of Chinese buyers, most transactions for international buyers, like those for the overall market, occur in the $10 Mn and under size range. TransEconomics, you may recall, monitors for its largest investors the office sector for opportunities of up to $25 Mn. While it’s true that office assets tend to require larger capital investments than other property types, we do notice that, even for U.S. office properties, the best opportunities in this segment are often found at around $10 Mn.

Though most foreign capital continues to favor the gateway cities of the east and west coasts of the USA, we agree with the report’s comment that secondary cities are increasingly attractive to the international buyer, and that better risk-adjusted returns may be found there. As we have said previously, the cities of the Southwest that TransEconomics follows on behalf of its clients are all located in states where job growth is the strongest it has been since the year 2000.

The report highlights a traditional preference for Florida by Latin American investors, but we see active investment by Latin American capital in the U.S. Southwest region as well. For example, just earlier this year, a six-building office park in Denver sold to a Chilean pension fund for an impressive $190 Mn, while a suburban office property was sold to a Mexican family for $16 Mn. Mexican high net worth capital also continues to be an active buyer of multifamily properties in all the major Texas markets. Also, TransEconomics channels Latin American capital to the U.S. commercial estate market, be it through outright acquisition of a single property or minority ownership interest via private real estate investment funds.

Already this year, we have placed several clients in a fund specialized in acquiring and managing neighborhood shopping centers located in the U.S. Midwest. This fund pays a strong current dividend and holds its properties for appreciation over a five to seven-year period. We also offer investors participation in a new fund targeting commercial properties located along Denver’s expanding passenger rail network, again with a focus on good current return and long-term potential appreciation, and are working on a similar fund for self-storage properties. The U.S. commercial real estate market is both broad and deep and can meet a wide range of investor needs.

Finally, the M&M report offers a brief discussion of the EB-5 investment program, which offers foreign investors the opportunity to earn a green card for permanent residency in the USA for themselves and their immediate families in return for making an investment of $500,000 in a job-creating project. TransEconomics represents one such EB-5 project in Colorado that is fully approved by the U.S. Treasury and issuing green cards to its investors; we can assist clients in pursuing this alternative. Although, as the report states, to date, most EB-5 visas have gone to Chinese nationals, people from all nationalities may apply and, in fact, the Colorado project we work with is keenly interested in diversifying its investor base to include Latin Americans.

To discuss any aspect of this report or to consider alternative asset investment strategies for your portfolio, please call us by dialing +52 (442) 210-3847 or writing to patrimonial@transeconomics.com.

Comentarios: Deje su comentario.

¿Por qué y en cuáles propiedades de oficinas conviene invertir? Segunda parte

John Greenman

Carta desde Denver

Esta es la Segunda parte de una serie en dos entregas dedicada a explicar, por un lado, por qué inversionistas de todo tipo tienden a preferir propiedades de oficinas y, por otro lado, qué criterios de selección de tales oficinas recomendamos para inversionistas privados (individuos o familias de alto patrimonio).

En la Primera parte, explicamos por qué los fondos centrados en rendimiento total y los inversionistas institucionales desearán asignaciones de portafolio considerables en propiedades de oficinas. En esta segunda parte, nos centraremos en los criterios de selección para los inversionistas particulares. El primer criterio es por supuesto la ubicación.

Buenos fundamentos macroeconómicos

Al igual que con todos los bienes raíces comerciales, al buscar propiedades de oficinas, lo primero que se debe hacer es elegir ciudades con sólidos fundamentos macroeconómicos. Seleccionamos todas las ciudades del sudoeste de Estados Unidos que supervisamos de cerca en TransEconomics precisamente en base a este criterio.

El tamaño correcto

Segundo, el tamaño de la propiedad debe corresponder con la capacidad patrimonial del inversionista. Muchos de los activos suburbanos más pequeños coinciden con la capacidad patrimonial de los inversionistas privados.

Ubicación de calidad

Tercero, se debe buscar cuidadosamente entre todas las inversiones disponibles y encontrar las que ofrecen ubicaciones de mejor calidad. La mayoría de los activos de oficinas en nuestras ciudades favoritas del sudoeste de Estados Unidos están situados en submercados suburbanos. Más precisamente, quedan en “micromercados” maduros que han sido densificados y ofrecen una amplia gama de servicios importantes para los arrendatarios de oficinas actuales, incluida la más amplia variedad posible de opciones de transporte.

La composición correcta de la nómina de alquileres

Finalmente, para maximizar la capacidad de generar tanto un ingreso fijo como el potencial de apreciación a largo plazo, los inversionistas privados deben analizar la composición de la nómina de alquileres. Preferimos edificios cuyos inquilinos provengan de una amplia gama de sectores, con vencimientos de alquiler escalonados a lo largo de varios años y una cantidad suficiente de inquilinos como para que ninguno predomine en el flujo y por lo tanto en la rentabilidad de la propiedad.

La diversidad de inquilinos es importante para evitar la exposición indebida al “colapso” de un determinado tipo de negocio, como aprendieron para su pesar los propietarios que tenían una alta concentración de firmas inmobiliarias residenciales en sus edificios cuando colapsó el negocio de las hipotecas de alto riesgo en 2007-2008.

Del mismo modo, tener alquileres que venzan gradual y ordenadamente, en vez de agrupados en uno o dos años, evita el riesgo de tener que rebajar la renta de todos los alquileres si las negociaciones de renovación de arriendos justo coinciden con un período de baja demanda del mercado.

Finalmente, si ningún inquilino individual representa más del 20% de todo el flujo de alquileres, la pérdida de dicho inquilino no pondrá en riesgo a toda la propiedad. La mayoría de las propiedades bien ocupadas pueden resistir la pérdida del 20% de los ingresos sin retrasarse en el pago del servicio de la deuda. Es mejor dejar los edificios ocupados sólo por uno o dos grandes inquilinos a los propietarios institucionales, que están mejor preparados para soportar los costos de buscar un nuevo arrendatario en caso de vacancia.

Próximo paso: eficiencia de gestión

Los inversores privados ciertamente pueden hacer una buena inversión de largo plazo en el sector de oficinas si tienen cuidado de seleccionar la composición de alquileres correctas después de preocuparse por una macroeconomía regional positiva y la calidad de la ubicación del activo, el siguiente paso será aumentar la eficiencia de gestión agregando propiedades similares cercanas –en otras palabras, creando un portafolio.

Comentarios: Deje su comentario.

¿Por qué y en cuáles propiedades de oficinas conviene invertir? Primera parte

John Greenman

Carta desde Denver

En el mundo de las inversiones inmobiliarias comerciales, las propiedades de oficinas pueden ser una opción controvertida. Los críticos afirman que los edificios de oficinas demandan más capital y son más volátiles en sus rendimientos que los demás tipos principales de propiedades, como las multifamiliares, industriales y de comercio minorista. (Dejamos de lado el sector hotelero. ya que en realidad un hotel, más que un activo de bienes raíces tradicional con alquileres a largo plazo, es un complejo negocio de operación diaria alojado en una envoltura inmobiliaria). ¿Entonces por qué asumir el riesgo de poseer propiedades de oficinas?

En la Primera parte de esta entrada de blog, nos centraremos en los inversionistas institucionales; en la Parte 2, en los privados.

Asignación correcta

Primero que nada, los inversionistas institucionales (personas morales) que desean participar rentablemente en la clase de activos de propiedades inmobiliarias comerciales (CRE) necesitarán una exposición considerable a propiedades de oficinas. Después de todo, en cuanto a su valor, los edificios de oficinas constituyen el 50% de las existencias actuales de CRE.

Valuaciones dinámicas

Segundo, los fondos de especulación y otros inversionistas institucionales con más criterios de rendimiento total (IRR) que de ingreso actual compran edificios de oficinas porque les atrae que este sector pueda generar plusvalía más rápidamente que otros tipos de propiedades, lo cual ocurre cuando un subsegmento determinado del espacio de oficinas crece aceleradamente debido a cambios en el entorno económico.

Vimos esto en Houston durante el boom de petróleo y gas de 2012–2014, y lo vemos en la explosiva expansión de alta tecnología en la zona de la bahía de San Francisco que comenzó por el 2010 y que aún sigue firme; los alquileres de las oficinas en San Francisco se han duplicado desde 2010.

Prestigio y felicidad

Un tercer factor para algunos inversionistas, particularmente los fondos soberanos extranjeros y algunos individuos de muy gran patrimonio, puede ser el prestigio y el goce derivado de ser dueño de una propiedad de oficinas icónica. Simplemente es más divertido ser el dueño del Rockefeller Center en Nueva York o la TransAmerica Pyramid en San Francisco que de la bodega más hermosa del mundo.

¿Qué pasa con los inversores individuos de alto patrimonio?

¿Pero qué pasa con el inversionista privado que, al incluir propiedades inmobiliarias comerciales como estrategia de diversificación de portafolio, sólo desea un buen rendimiento ajustado al riesgo? También para estos inversionistas las oficinas pueden ser atractivas, pero sólo las de cierto tipo. Precisamente nos concentraremos en ese tipo en la Parte 2.

Comentarios: Deje su comentario.

Why office properties and which ones? Part 2

John Greenman

Letter from Denver

This is Part 2 of a two-part series to point out why investors of all types tend to like office properties and, for private (high net-worth) investors, offer office building selection criteria.

In Part 1, we explained why funds focused on total returns and institutional investors will want sizeable portfolio allocations to office properties. In this second part, we focus on selection criteria for private (high net worth) investors. Criterion number one is of course location.

Good macro fundamentals

As for all commercial real estate, when seeking office property, private investors should first seek out cities with good macroeconomic fundamentals. We selected all the Southwestern U.S. cities we monitor closely at TransEconomics precisely on this basis.

The right size

Second, the property size must match the investor’s equity capacity. Many of the smaller suburban assets do match the equity capacity of private investors.

Quality location

Third, one must sift carefully through the many available investment options to find those offering the best-quality locations. Most of the office assets in our favorite Southwestern U.S. cities are located in suburban submarkets and more precisely within mature infill “micro-markets” offering a wide range of amenities important to today’s office tenants—including the widest possible variety of transit options.

The right roll rent composition

Finally, to maximize the ability to generate both a steady cash return and the potential for long-term value appreciation, private investors must look at rent roll composition. We prefer buildings whose tenants come from a wide range of industries, with lease expiries staggered over a number of years, and a large enough number of tenants so that none dominates the rent roll and hence the economics of the property.

Tenant diversity is important to avoid undue exposure to a “meltdown” in one particular type of business, as landlords who had high concentrations of residential real estate firms in their buildings learned to their sorrow when the subprime mortgage business collapsed in 2007–2008.

Likewise, having leases that expire gradually and in an orderly fashion rather than “bunched” in a single year or two avoids the risk of re-setting the entire rent roll to a lower rent level if the lease renewal negotiations happen to fall during a period of weak market demand.

Finally, limiting exposure to any one single tenant to, ideally, no more than 20% of the entire rent roll ensures that the loss of such tenant does not imperil the entire property. Most well-occupied properties can withstand the loss of 20% of income and still stay current on debt service payments. Buildings occupied by only one or two big tenants are best left to institutional owners, who are better able to bear the costs of re-tenanting in the event of vacancy.

Next step: management efficiencies

By taking care to select the right rent rolls after first working “from the top down” in terms of positive regional macroeconomics and quality of location of the asset, private investors indeed can make a good long-term investment in the office sector. Their next step will be to increase management efficiencies by adding similar properties nearby—in other words, create a portfolio.

Comentarios: Deje su comentario.

Why office properties and which ones? Part 1

John Greenman

Letter from Denver

Within the world of commercial real estate investing, office properties can be a controversial investment choice. Critics say that office buildings are more capital-intensive and more volatile in their returns than the other major property types—namely, multi-family, industrial, and retail. (Here we leave aside the hotel sector as in reality a hotel is a complex daily operating business housed inside a real estate shell rather than a traditional real estate asset with longer term leases). So why take the risk of owning office properties?

In Part 1 of this blog entry, we focus on institutional investors; in Part 2, on private investors.

Correct allocation

First of all, institutional investors seeking to be properly allocated to the commercial real estate (CRE) asset class will need a sizeable exposure to office property. After all, office buildings make up 50% of existing stock of CRE as measured by investment value.

Dynamic valuations

Second, “market-timer” opportunistic funds and other institutional investors driven more by total return (IRR) criteria than current income buy office buildings because like the fact that the office sector can move upward in value more quickly that other property types when a particular sub-segment within the overall demand for office space increases rapidly owing to changes in the overall economy.

We saw this Houston during the oil and gas boom of 2012–2014, and we’re seeing it in the explosive high-tech expansion in the San Francisco Bay area that began in about 2010 and is still going strong—office rents in San Francisco have doubled since 2010.

Prestige and happiness

A third factor for some investors, particularly sovereign foreign funds and some very high net worth individuals, can be the prestige and enjoyment derived from owning an iconic office property. It’s simply more fun to own Rockefeller Center or the TransAmerica Pyramid in San Francisco than even the world’s nicest warehouse.

What about high net worth individuals?

But what about the private investor who just wants a good risk-adjusted return when diversifying his overall portfolio to include commercial real estate? Office can still make sense for such an investor, but only a certain kind of office. Precisely what kind is our focus in Part 2.

Comentarios: Deje su comentario.

Nadar a favor de la corriente en los bienes raíces comerciales

John Greenman

Carta desde Denver

En el artículo titulado “Colorado y el Oeste toman la delantera en el maratón de aumento en el empleo tras la recesión“, el Denver Post ilustra un importante principio de la inversión en bienes raíces de uso comercial. Señala que la mejor manera de adquirir una buena propiedad es usar un enfoque “descendente”, vale decir, comenzar con la confianza en un mercado geográfico a nivel macroeconómico antes de considerar cuál propiedad individual comprar.

El artículo incluye este cuadro útil que clasifica los estados de Estados Unidos en cuanto al crecimiento laboral a largo plazo:

states-job-growth

Observe que las ciudades que analiza TransEconomics más minuciosamente para la inversión en oficinas, concretamente Denver, Phoenix y las cuatro ciudades principales de Texas, se encuentran en los cinco estados principales. Enfocándonos en estos tres mercados, le damos a los inversionistas la ventaja de lo que denomino “demografía positiva”.

Evidentemente, debemos analizar cuidadosamente los méritos de cada propiedad individual para encontrar aquella que cumpla mejor con el perfil de riesgo y ganancia que buscan nuestros inversionistas. Pero este enfoque descendente brinda la coyuntura a nivel macroeconómico que en mi experiencia optimiza el rendimiento de la inversión en relación con el desempeño de los mercados que tienen un bajo crecimiento o que lisa y llanamente se están depreciando.

Lamentablemente, el “crecimiento lento” o la “depreciación” reflejan lo que ocurre en la mayoría de las áreas geográficas del noreste y la zona atlántica central de EE. UU. Observe la baja calificación en el cuadro superior.

Algunos inversionistas afirman que aún es posible efectuar inversiones rentables en mercados débiles descubriendo los mejores bienes que allí se encuentren disponibles. Considero que es difícil ganar dinero de ese modo.

Como solía decir uno de mis exsocios, “siempre es mejor nadar a favor de la corriente”.

Comentarios: Deje su comentario.

Swimming Downstream in Commercial Real Estate

John Greenman

Letter from Denver

In “Colorado and the West are winning the post-recession marathon of job gains“, the Denver Post illustrates an important principle of commercial real estate investment, which is that the best way to make a successful property acquisition is to use a “top-down” approach—start with confidence in a geographic market on a macroeconomic level before considering which individual property would be best to buy.

The article includes this nifty chart ranking U.S. states by long-term jobs growth:

states-job-growth

Notice that the cities TransEconomics monitors most closely for office investment—Denver, Phoenix, and the four major cities of Texas—are all located in the top five states. By focusing on these markets, we give our investors the advantage of what I call “positive demographics”.

Of course, we must still carefully analyze the merits of each individual property to find the best fit for our investor’s risk-return profile. But our top-down approach provides momentum at the macro level that in my experience boosts investment performance relative to performance in markets suffering from slow growth or outright shrinkage.

“Slow growth” or “outright shrinkage”, unfortunately, describe most geographic areas of the Northeast and Mid-Atlantic in the USA. Note their low ranking in the chart above.

Some investors say it’s still possible to make successful investments in weak markets by discovering the very best asset available therein. I find it hard to make money that way.

As a former business partner of mine liked to say, “It’s always easier to swim downstream.”

Comentarios: Deje su comentario.

El riesgo del Brexit impulsa pocos cambios en nuestras estrategias

Genevieve Signoret

Carta desde Querétaro

Según las encuestas, el riesgo de que los votantes del Reino Unido decidan abandonar la Unión Europea es de aproximadamente el 50%. Si optan por ello, el resultado probable a nuestro entender será que todos los activos de riesgo se liquidarán durante uno a tres meses y que, durante este período, repuntarán las clases de activos de refugio.

De los activos de refugio, los más seguros son los bonos del gobierno estadounidense y japonés, y mientras mayor sea su plazo, mejor. Pero por otro lado, los británicos podrían decidir permanecer en la UE, generando resultados opuestos para el mercado. Por lo tanto, cualquier concentración excesiva en clases de activos de refugio podría ser contraproducente. Además, consideramos que incluso en caso de que triunfe la opción del Brexit, la caída de las valuaciones de los activos de riesgo será de corta duración, digamos de unos tres meses.

Nuestro argumento es uno bien conocido por nuestros lectores: los inversionistas están crónicamente sedientos de rendimiento y las tasas de interés mundiales se mantienen cercanas a cero. Cualquier episodio de pánico financiero endurecería las condiciones del mercado, eliminando la necesidad de una alza de tasas por parte de la Fed en los próximos meses. Además, la zona del euro y Japón probablemente ampliarán el estímulo monetario pase lo que pase. Por lo tanto, el efectivo e incluso los bonos apenas generarán rendimiento, por lo que el mayor apetito por posiciones en efectivo no durará mucho. Tarde o temprano sucederán dos cosas. Primero, los inversionistas se darán cuenta de que, aunque el Brexit es un acontecimiento negativo a nivel macro global, prácticamente no presenta riesgos a corto plazo para el sistema financiero; por lo tanto no hay razón de que cunda el pánico. Segundo, los inversionistas ya no podrán contener su sed de rendimiento.

Dadas estas perspectivas, para los clientes con horizontes de inversión superiores a seis meses, solamente estamos modificando las estrategias de portafolio a fin de proteger los fondos necesarios en los siguientes seis meses colocándolos en efectivo en dólares o en títulos del Tesoro de EE UU de corto plazo (1-3 años).

Recuerden, excepto para los clientes con horizontes de inversión superiores a una década, todos actualmente tienen un 20-30% de sus portafolios en títulos del Tesoro de EE UU de largo plazo. Estos títulos repuntarán en caso de que se concrete el Brexit. Este “seguro” ayudará a moderar hasta cierto grado cualquier pérdida en los portafolios de corto plazo.

También recuerden que, actualmente, estamos optimistas con respecto al alza del dólar: al menos el 85% de todos los portafolios cliente, sin importar donde estén, están asignados a activos denominados en dólares estadounidenses de refugio.

Comentarios: Deje su comentario.

Brexit risk spurs little change in our strategies

Genevieve Signoret

Letter from Queretaro

According to polls, the risk that United Kingdom voters will choose to leave the European Union is about 50%. If voters choose to leave the EU, the likely outcome in our view is that all risk assets will sell off for 1–3 months and that, during this time, safe-haven asset classes will spike.

Safest of all havens are U.S. and Japanese government bonds, the longer-term the better. The problem is, Britain’s voters could choose to remain in the EU, producing opposite market results. Thus, any over-concentration in safe-haven asset classes could backfire. Furthermore, we judge that, even in the event of a Brexit, the drop in risk asset valuations will be short-lived—say, three months long.

Our argument is one by now familiar to our readers: investors are chronically thirsty for yield, and global rates are hovering near zero. Any bout of market panic will tighten market conditions, rendering the need for a Fed rate hike in the next few months moot. Also, the euro area and Japan are likely to expand monetary stimulus no matter what. Hence, cash and even bonds will pay hardly any yield, so increased appetite for cash positions will be short-lived. Eventually, two things will happen. First, they will realize that, although a Brexit is a global macro negative, it poses virtually no short-term risk to the global financial system—it’s no cause for panic. Second, investors will no longer be able to contain their thirst for yield.

Given these views, for clients whose investment horizons exceed six months, we are making no changes to portfolio strategies except to protect funds needed in the next six months by putting them into dollar cash or short-term (1-3-year) U.S. Treasury securities.

Remember, except for clients whose investment horizons stretch beyond a decade, all our clients are currently holding 20–30% of their portfolios in long-term U.S. Treasury securities. These USTs will spike in the event of a Brexit. This “insurance” will serve to moderate to some degree any short-term portfolio losses.

Remember also that, currently, we’re dollar bulls—at least 85% of all client portfolios, regardless of where they are held, are allocated to assets denominated in the safe-haven U.S. dollars.

Comentarios: Deje su comentario.