In the current market cycle, the long-standing debate between passive and active investing appears to have been laid to rest. Judging by the exodus of funds from active managers, passive investing has won hands down.
Since 2007, investors have pulled $747 billion out of actively managed equity funds and purchased $1.65 trillion of passively managed equity index funds, a swing of $2.4 trillion – Vanguard Group Founder Jack Bogle, Financial Times, 12-13-16.
So should investors ditch their active managers and move their money to passively managed index funds and ETFs?
The stock market has recovered since the correction earlier in 2016, but we remain concerned about what lies ahead.
The underlying economic fundamentals don’t point to a strong economy or sustained growth. This recovery is the most tepid of any in the post-World War II era. If one or more interest rate hikes occur in 2016, it is likely that markets will encounter some rough patches.
In markets like this, investors need to be prepared for volatility. One of the best ways to achieve that goal is making sure alternative investments are a key part of a portfolio.
Managing Significant Wealth
Our team at Cypress Wealth Advisors has been helping individuals and families manage their wealth for more than 30 years. We advise our clients on many issues but we are most often asked to help answer questions about managing significant wealth.
We’ve gathered our collective experience to focus on some of the key questions and answers to these challenging issues in a new white paper: Money and Family: The Hard Questions In Life. Please click here to download the complete report.
Here are some highlights from our observations:
What makes for successful management of significant wealth?
Good communication is probably the single most common attribute in successful family wealth management. Unfortunately, many wealth holders are afraid to discuss wealth with their children, and unhappiness almost always follows. Wealth holders shouldn’t underestimate the value of clearly conveying their wishes to future generations.
By Barbara Young, Cypress Wealth Advisors
Just because someone is terrific at wealth creation doesn’t necessarily mean they’re equally good at managing serious money.
I was reminded of that during a recent conversation about the importance of alternative investments on a portfolio.
In my 30 years of investing and wealth management, I’ve seen many strategies come and go. One that is here to stay – and was previously accessible only to the wealthiest – is diversifying risk with alternative assets.