Precious Metals and Precious Metal ETFs

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Precious Metals and Precious Metal ETFs

Khotari and Kudal, (2009) reports that gold is a favorite of all precious metals even though it has been delinked from currencies; it still plays a major role in the global economy. Connover, Jensen, Johnson, Mercer (2009) find that portfolio performance generally improves regardless of which precious metals are added. They say that allocating 25% of the portfolio to precious metals equities increases annual returns by 1.65% and reduces the portfolio's standard deviation by 1.86%. Smaller allocations to precious metals improve portfolio performance, but to a lesser degree.

Khotari and Kudal, (2009) in their study define an exchange-traded fund (ETF) as investment vehicles traded on the stock exchange much like stocks. They list the main attraction for investor is their simplicity, low cost diversification benefits and the ability to trade intraday.

Conover, Jensen, Johnson, Mercer (2009) explore the premise that studies have proven the numerous investment benefits of adding precious metals to portfolios of US equities and any find that positive allocation improve overall performance. They have found that for a US equities investor, portfolio performance improves substantially when a prominent portion of the portfolio is re-allocated to the equities of precious metals firms.

Infrastructure

Keary, (2013), shares in his article that in a recent survey by AMP Capital and Institutional Investor magazine, 60 of the world's leading institutional investors were surveyed on asset allocation and investment trends. The findings showed that direct infrastructure assets were the most popular asset class to invest in during the first quarter of 2013. This was followed by private equity and real estate. A survey conducted by Pension & Investment (PSil) magazine identified that 46 per cent of respondents plan to increase their asset allocation to real assets in the next three to five years. The attraction of real assets is the class's risk-protection characteristics coupled with the potential for higher returns. The P&l survey also found 24 per cent of institutions invested in real assets to decrease their portfolio's risk profile, while 12 per cent invested in this asset class to increase their return profile. Investors are increasingly recognizing that infrastructure and some property assets can potentially provide higher returns as well as capital stability for comparatively little additional risk. Real assets are considered a step up the risk-return curve from cash and fixed income - without having to take on the risk associated with equities. According to UBS (2013), infrastructure assets include the installations and facilities that a society requires for the orderly operation of an economy. Chen and Steer prospectus (2013) provide examples of infrastructure assets include Transportation assets such as toll roads, rail, ports, and airports. Utility and energy assets such as water, power generation, electricity, gas networks, and fuel storage facilities Communications infrastructure. The Send’Or Capital Fund, as stated in Cheen and Steers’ prospectus, will invest in common stocks and other equity securities, preferred securities and fixed income and securities of U.S. and non-U.S. infrastructure companies. Infrastructure companies are companies that derive at least 50% of their revenues from, or have at least 50% of their assets committed to, the management, ownership, operation, construction, development, or financing of assets used. This is in connection with: the generation, transmission, sale or distribution of electric energy; distribution, purification and treatment of water; provision of communications services, including cable television, satellite, microwave, radio, telephone and other communications media; provision of transportation services, including toll roads, airports, railroads or marine ports. Infrastructure

Companies also include energy-related companies organized as master limited partnerships (MLPs).

Send’Or Capital Global Real Asset Fund will focus on granting investors with leading investment performance through tailored access to the private equity asset class. Its global team possesses the skills and expertise across a broad range of complementary disciplines, offering ‘on the ground’ access to major private equity markets. The Fund may invest up to 20% of its net assets in equity securities, preferred securities, fixed income securities (including convertible securities) and ETNs, other than those set forth above.  The Fund may invest in securities of other closed-end or open-end funds of its choosing. This include ETFs and other funds in various sector such as technology, basic material, financials,  consumer goods, industrial goods, and services to the extent permitted under Section 12(d)(1) of the Investment Company Act of 1940, as amended (the “1940 Act”) and the rules there under, or any exemption granted under the 1940 Act.

Infrastructure vs. Other Private Equity Strategies

From June to August 2013, Preqin carried out a series of detailed interviews with 450 active investors across infrastructure, real estate, private equity, and hedge funds in order to gain an insight into institutional investor attitudes towards alternative assets. The full results of this study are available in Preqin Investor Outlook: Alternative Assets, H2 2013. Based on this study, the potential for long-term growth within the infrastructure space appears significant.

A considerable 58% of infrastructure investors anticipate increasing their allocations real asset over the long term, a higher proportion than in any other alternative asset class.  Forty percent of respondents intend to maintain their current level of exposure to infrastructure, while just 2% expect to reduce their allocations in the future. Investor appetite for exposure to infrastructure opportunities appears strong. This is demonstrated by recent trends in fundraising; an aggregate $15.8bn has been raised by the 22 unlisted infrastructure funds that have reached a close in 2013 to date, representing 42% increase on the aggregate capital raised during the same period in 2012.

According to Cohen and Steers (2013) Global Infrastructure Equities report, the DJ-Brookfield Global Infrastructure Index advanced 5.1% for the six-month period ending June 2013.   Electric utilities were in favour through April, but then partially retreated as investors rotated away from higher yielding, lower growth assets.  The toll roads sector performed well, helped by a gain from France-based Vinci.  Severn Trent a U.K. water company, briefly spiked on takeover speculation. There have been a number of U.K. water company acquisitions by private investors over the past few years.

Prequin Global Infrastructure report (2013) compared infrastructure fund of older vintages to other strategies and they have performed well, with the median net IRR for funds of vintages 1993-1999 only slightly lower than to private equity and private equity real estate. This suggests that even when compared to asset classes traditionally aiming for higher returns, unlisted infrastructure funds have the potential to provide investors with similar returns. The standard deviation of unlisted infrastructure fund returns also demonstrates the lower-risk nature of the asset class when compared to other strategies. The standard deviation of net returns for infrastructure funds of vintages 1993-2009 is 13.9%, less than the 17.2% for buyout, 50.6% for venture capital (excluding early stage) and 17.6%  for real estate (all based on 1993-2009). Infrastructure funds are often marketed to institutional investors as being able to provide additional portfolio diverse hedge against inflation, and the potential for stable long-term returns. Many investors are active in other alternative asset classes alongside infrastructure, so it is interesting to compare the performance of infrastructure funds with other private equity strategies.

Investment performance

Analysis of various investments at these year cycles

As Cohen and Steers (2013), Global Real Asset fund has not yet completed a full calendar year of operation as of now, no performance returns are presented in this part of the Prospectus. Annual performance returns provide some indication of the risks of investing in the Fund by showing changes in performance from year to 12 year. Comparison of Fund performance to appropriate indexes indicates how the Fund’s average annual returns compare with those of broad measures of market performance. Performance information will be available at www.cohenandsteers.com or by calling (800) 437-9912. The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.

An analysis of the hypothetical $10,000 investment in the fund over the past 10 years or since its inception (for funds lacking 10-year records)

 The result is compared with benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes.

THIS WOULD BE EXCELLENT –WHERE ARE THE CHARTS AND DATA? TO ADD CHARTS AND DATA

• 10 year Cycle
• 5 Year Cycle
• 1 year Cycle

Evidence for the Investment Rationale of Real Assets

This type of instrument is considered a solid investment due to the lasting and durability of its selected investments. Braham(2010) makes the case that oil, corn, gold, wheat are all concrete and explains that even if the price of oil fluctuate more or less in one trading day, it will never completely disappear. Principal Fund (2013) states in their report Principal Paper on Real Assets, that their view is that inflation risk is intrinsic to any economy based on paper currency (rather than a physical commodity like gold) where governmental and quasi-governmental entities, such as central banks, control the money supply. They suggest real assets as a premier investment selection because their correlation to traditional stock and bonds. They support this with evidence that commodities have low correlation to stocks and bond and can be a good choice to lower overall portfolio risk while enhancing the potential for better long-term risk- adjusted returns.

• Inflation Hedge

They also list this asset class as an increasing good inflation hedge. Inflation, they say, is the increase for currency required to purchase goods and services. They are firm on the theory that commodities can help protect investment portfolios against inflation because they represent the value of goods and services not the value of currency and according to the U.S. Bureau of Labor Statistics, inflation has reduced Americans' purchasing power every year but two dating back to 1945.

• The most commonly referenced measure of inflation is the Consumer Price Index (CPI). The U.S. Bureau of Labor Statistics bases the CPI on a monthly survey and it compares changes in the prices paid by consumers for a representative basket of goods and services. The monthly CPI reading is widely considered a useful way to measure prices over time.

• When it comes to investing - whether for income or for growth - you cannot afford to ignore the eroding effect inflation can have on the value of your assets.

• THIS TABLE IS GOOD – TRY AND REPRODUCE IT RATHER THAN CUT AND PASTING IT

*Source: The Handbook of Inflation Hedging Investments

• Diversification Instrument
• Real Assets are a unique class that can provide valuable diversification benefits to an investment portfolio.
• Used in combination with traditional assets like stocks and bonds, they can potentially reduce overall portfolio long-term risk while increasing upside potential.
• AGAIN-THIS IS GOOD TRY AND RECREATE RATHER THAN CUT AND PASTE

FOR SOURCES USE THENAME OF the DOCUMENT NOT A WEBLINK

Source: https://www.principalfunds.com/investor/promo/dra/real_assets.html

Source: https://www.principalfunds.com/investor/promo/dra/real_assets.html

References

USE DOCUMENT REFERENCES IN A LITERATURE REVIEW NOT WEBLINKS

http://fshandbook.info/FS/html/handbook/LR/2/2

Price, Russell, PhD REIT Performance from Real Estate Mutual Fund Holdings Journal of Business & Economics Research – December 2011 Volume 9, Number 12

Zhou, Gunasekarage, and Power (2005)  

http://therealasset.co.uk/gold-investment-tapering/

https://www.preqin.com/docs/samples/The_2013_Preqin_Global_Infrastructure_Report_Sample_Pages.pdf?rnd=1

https://www.preqin.com/docs/newsletters/inf/Preqin_Infrastructure_Spotlight_September_2013.pdf

http://ddoublep.wordpress.com/2012/10/05/an-argument-for-infrastructure-investment-in-one-chart/

http://www.ubs.com/global/en/asset_management/infrastructure-and-private-equity/about_iaf.html

http://www.londonstockexchange.com/about-the-exchange/company-overview/our-history/our-history.htm

http://www.nyx.com/who-we-are/history/new-york

http://www.bloomberg.com/quote/HSI:IND

Amenc, Martellini, Ziemann (2008) in their report discuss how a recent surge in worldwide in°ation has increased the need for investors to hedge against unexpected changes in price levels. In the most recent forecasts, global consumer price index (CPI) in°ation invasion has been revised up more than a percentage point, to 5.0%, for calendar 2008 by 0.7 percentage points, to 3.7%, in 2009. The trend is likely to continue for the near future despite the current crisis, given the long-term increased demand pressure on food and energy resources. Due to these trends, in°ation hedging has become a concern of critical importance for private investors, who consider in°ation as a direct threat with respect to the protection of their purchasing power. It has also been a concern for pension funds that face pension payments that are indexed (conditional or full indexation) with respect to consumer price or wage level indexes. This focus on inflation hedging is consistent with the heightened focus on liability-risk management that has emerged because of the 2000-2003 pension crises. Moving beyond traditional investment vehicles such as stocks and bonds, recent academic research has also suggested that alternative forms of investments offer attractive inflation-hedging benefits. Commodity prices, in particular, have been found to be leading indicators of inflation in that they are quick to respond to economy-wide shocks to demand. Commodity prices generally are set in highly competitive auction markets and consequently tend to be more flexible than prices overall. Beside, recent inflation is heavily driven by the increase in commodity prices, in particular in the domain of agriculture, minerals, and energy.

Principal paper (2013) explains that investors today face a foe that has been written off for most of the past 30-40 years. The risk of inflation, in addition to the more familiar risks of longevity and down market cycles, could soon be threatening to rise to nearly unprecedented levels.

Cremers (2013) in his report investigates the relatively low correlations between the investment perfor­mance of real assets and traditional assets like public equities and government bonds.

 See Table 2 combined with the posi­tive abnormal returns of the real assets relative to these tradi­tional assets (see Tables 3 to 6) suggests considerable diversi­fication benefits to adding direct investments in real assets to an equity/bond portfolio.

Amenc, Martellini, and Volker (2008) in their paper based on present an empirical analysis of the benefits of alternative forms of investment strategies from an asset-liability management perspective.

Idzorek, Barad, Meier, (2007) discuss the advantages of direct real estate investment as providing the investor the ability to  have direct control, the ability to select individual properties and some potential tax-timing benefits. They found that largest investors (large institutions) will likely implement their target allocations with a more heavily weighted direct commercial real estate investment program, while smaller investors will likely do it more with REITs and listed real estate stocks.

Cohen and Steer, (2013), stated that U.S. REITs had positive returns, aided by continued improvement in real estate fundamentals for nearly all property sectors. Price, (2011), investigates how the performance of REITs may determine the level of holdings in real estate mutual funds. His study combines the process of asset composition of REITs with the REITs’ contribution in real estate mutual fund portfolios.

Cremers (2013) in his paper considered the performance of direct invest­ments in three real asset classes: natural resources (namely timberland and farmland), energy infrastructure, and com­mercial real estate. Using publicly available data for a period starting in 1978 (for real estate) or 1996 (for infrastructure) and ending in 2012, the main result is that investing in these real asset classes would have provided significant diversification benefits. This would be relative to a traditional portfolio consisting of only public equities and government bonds, without evidence of deteriorating overall performance Akey, (2006) studies if a commodities investment can be both a high-risk adjusted return source and a portfolio hedge risk. Connover, Jensen, Johnson, Mercer (2009) find that portfolio performance generally improves regardless of which precious metals are added.

6)      Methodology – twin approach of a) primary evidence from interviewees to determine their investment criteria and whether they might be willing to invest and b) analysis of other fund structures

Investor Interviews

Interviews were conducted with investors and investment firms to show the interest express in the market place for real asset as investment instruments.  Though much publication provided research data to illustrate what asset classes were most trendy in today’s climate, it was felt necessary to find a random sample of people with investing experience to assist in this task. The researcher sent a questionnaire to those selected in order to prepare them for the session. The investors express some concerns regarding the questions. Some felt that the time needed was too much, other felt that the questions were to invasive.  Because these interviewees were located in various parts of the world, culture had to be taken into careful consideration.  The diversity of the sample was essential since Send’Or Capital Global Real Asset Fund aims to gain exposure in the global market place/ In selecting this sample, age, investment goals, attitude of negative and volatility of returns and time frame of investment were factored in.    In a recent article, it was reported that wealthy investors do not see themselves as “old” until they are 80, and that perception is driving how they save for retirement, according to a survey released Monday by UBS AG. As life expectancy stretches, about seven in 10 investors do not see themselves as old until they can no longer live in their homes or drive, rather than when they retire or reach milestone such as having grandchildren or developing ailments such as becoming forgetful. A majority of investors don't describe themselves as old until over the age of 80, when nearly eight in 10 consider themselves elderly. Fewer than half of 70-something investors describe themselves as old. (The average American man lives to 76; the average woman lives to 81.)

The table below illustrates investor’s styles, which were also discovered during the interview. CommSec Quantitative Research developed this model.

To Recreate

CommSec Quantitative Research has developed the methodology for classifying funds and for matching investor profiles with those funds

• Fund comparative
• Day trading
• Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes, they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period. If you are a day trader, or are thinking about day trading, read our publication, Day Trading Your Dollars at Risk. We also have warnings and tips about online trading and day trading. For more information on day trading and the related FINRA margin rules, please read the SEC staff’s investor bulletin “Margin Rules for Day Trading”
• http://www.sec.gov/answers/daytrading.htm
• Buy and hold investing
• Buying and holding investments is perhaps the simplest strategy for achieving growth, and over time, it can be one of the most effective. Those investors who simply buy stocks or other growth investments and keep them in their portfolios with only minor monitoring are often pleasantly surprised with the results. http://www.investopedia.com/articles/basics/13/portfolio-growth-strategies.asp

Value Investing

Investors are often looking for ways to beat the market. If you are one of those investors, you should consider following a proven strategy that has been implemented by the investment greats. Value investors figured out how to beat the average annualized returns of the S&P 500 a long time ago, and many have successful records of accomplishment spanning several decades to prove it. The most famous value investor, of course, is Warren Buffett, but there are many others, including Benjamin Graham, David Dodd, Charlie Munger, Christopher Browne, and Seth Klarman. If you are an avid sale shopper, you already have some of the most important skills a value investor needs. You know that the time to buy a 12 pack of soda is not when it is regularly priced at $6. Perhaps the soda is, in fact, worth $6, but you know that if you wait for the right opportunity you can get it for less. The right time to buy soda is not even when it is on sale for $4. No, you want to wait until the soda sales cycle hits a low and you can purchase a 12 pack for just $2. Then, you will buy enough soda to last you several months, or maybe even the whole year. You will be getting a $6 value for just $2.
Apply this idea to stocks and you have value investing, plain and simple. Any time you buy a stock, you want its intrinsic value to be higher than its market price. If you have the right temperament and you are willing to put in the effort, you can learn how successfully to invest in individual stocks using value-investing techniques. This tutorial will help you get started, which are used by investors

http://www.investopedia.com/university/value-investing/

7)      Key Findings from this research

Research Question -Why is a Real Asset Fund a sound and profitable investment vehicle?

Principal (2013) report on real assets explains inflation is a risk that cannot be diversified away using only traditional asset classes. Their paper demonstrates to financial professionals working with investors, retired or otherwise, how a diversified array of real asset strategies can be used to address —and help overcome — inflation and other risks investors face

Amenc, Martellini, Ziemann (2009) explore the  current context of a short- and probably medium-term downturn in the financial markets, our research in this area seems to be of particular relevance for long-term investors. Their results suggest that real estate and commodities have particularly attractive inflation hedging properties over long-horizons, which justify their introduction in pension funds' liability-matching portfolios. They show that novel liability-hedging investment solutions, including commodities and real estate in addition to inflation-linked securities, can be designed to decrease the cost of inflation insurance for long-horizon investor.

• Investment Strategy

Investors Need Innovative Strategies. The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in "real assets" and securities of companies that derive at least 50% of their profits or revenues from, or commit at least 50% of assets to real assets and activities related to, real assets. Real assets are defined broadly by the fund and are considered to include any assets that have physical properties, such as energy and natural resources, real estate, basic materials, equipment, utilities and infrastructure, and commodities.  The fund will invest in companies located throughout the world, and there is no limit on the fund's investments in foreign securities or emerging markets. http://www3.troweprice.com/fb2/fbkweb/objective.do?ticker=PRAFX

To mention approaches such as top bottom approach or bottom down approach.

• Implementation /Execution

Execution

Your decision to invest in a certain scheme comes with the need for execution of such an investment. In this scenario, you will benefit the most with a dedicated team of managers:

Relationship Manager

The Relationship Manager is someone who has a complete understanding of your risk profile and attitude towards risk. Your Relationship Manager must have a strong understanding of your objectives towards investments to be able to recommend the right product.

• Service Manager

The Service Manager will enable seamless handling of the backend and operational requirements. This will keep your investment process hassle free and paperless wherever possible. He will regularly follow up on operation requirements with various manufacturers and others to keep up a smooth process.

Investors must therefore choose a firm with the capacity to access a wide range of products advise you on your investment choices and execute these through the right channels.

 http://wealthmanagement.kotak.com/wealth-management/research-execution

Intro Execution

Clients can connect directly to a linear distribution broker directly leveraging the proprietary linear execution rates.

Distribution brokers are selected individually for each client by looking at the underlying product and service level requirements.

Directed Execution

Clients connect directly to linear fix connectivity infrastructure; this provides clients with electronic access to the complete linear distribution broker network.

Directed Execution allows clients to access multiple brokers via one connection, hence increasing market access, flexibility and resiliency.

Outsourced Execution

Outsourced Execution is a white label solution for clients wishing to offer their own proprietary underlying clients electronic connectivity. Outsourced execution provides clients with an incremental revenue stream with no additional costs or amendments to their internal connectivity infrastructure.

 http://www.linearinvestment.com/Execution-Trading-Services/Service-Models

8)      Outline of your Proposed Fund Structure

• Fund Structure
• Objectives

The investment objective of Cohen & Steers Real Assets Fund, Inc. (the “Fund”) is to achieve attractive total returns over the long-term and to maximize real returns during inflationary environments. The investment objective of the Fund is to achieve attractive total returns over the long-term and to maximize real returns during inflationary environments. “Real returns” are defined as total returns adjusted for the effects of inflation. There can be no assurance that the Fund will achieve its investment objective. The Fund may change its investment objective without shareholder approval, although it has no current intention to do so. Shareholders will be provided with at least 60 days’ prior written notice of any change to the Fund’s investment objective. (COHEN & STEERS REAL ASSETS FUND, INC.

Introducing Global Real Asset Fund

The Send’Or Capital Real Asset Fund provides long-term total returns that outpace inflation over an economic cycle. The investment team seeks a diversified global exposure to multiple inflation-sensitive asset classes, and strives to add value using top-down allocations and bottom-up security selection. The Fund expects to invest its assets principally in investments that in the judgment of the sub-adviser are affected directly or indirectly by the changes in the rate of inflation and, therefore, providing real returns (such assets are defined as “real assets”). Real return is the rate of return after adjusting for inflation. These real assets include equity and fixed income securities and other instruments issued by or related to natural resource companies, certain types of inflation linked bonds, and commodity related investments and derivative instruments. Under normal circumstances, the Fund will invest at least 80% of its assets (plus borrowings for investment purposes) in such asset categories. https://www.hartfordfunds.com/funds/glrel.institutional-investors.html

The Send’Or Capital Global Real Asset Fund seeks to provide shareholders with exposure to a diversified portfolio of asset classes that are directly or indirectly linked to physical assets with positive correlation to inflation and are expected to maintain their real (after inflation) value over time. These assets may include precious metals and related equities; industrial, energy and agricultural commodities and related equities; real estate investment trusts (REITs); emerging market (EM) currencies; real return bonds and treasury inflation-protected securities (TIPS) and cash. http://www.purposeinvest.com/purpose-investments-inc-launches-new-funds-and-revolutionary-fund-structure/

The fund is designed for aggressive investors with long-term horizon who want significant exposure to real assets. They should also be able to withstand inevitable setbacks in an effort to achieve potential long-term growth. Appropriate for both taxable and tax-deferred accounts, such as IRAs. http://www3.troweprice.com/fb2/fbkweb/objective.do?ticker=PRAFX

The fund's goal is to hold a portfolio of securities and other investments that, over time, should provide some protection against the impact of inflation. Because the fund focuses its investments in certain industries that involve activities related to energy, natural resources, real estate, commodities, infrastructure, and other real assets, the fund is more susceptible to adverse developments affecting one or more of these industries than a more broadly diversified fund would be and may perform poorly during a downturn in any of those industries. The fund can invest a sizable portion of its assets in foreign securities. The fund will therefore be subject to the risk that some holdings may lose value because of declining foreign currencies, adverse political or economic developments overseas, illiquid trading markets, governmental interference, or regulatory practices that differ from the U.S. These risks are heightened for the fund's investments in emerging markets. http://www3.troweprice.com/fb2/fbkweb/objective.do?ticker=PRAFX

• Smart investment strategies: Anyone can create a low-fee index product but what matters is investing with intelligence and utilizing the right rules to select and weight the holdings. To achieve this we collaborated with Breton Hill Capital Ltd., enabling us to bring some of the most intelligent, rules based investment strategies to Canadian investors.
• Low fees: It is undeniable that fees are critical to long-term investing success. At Purpose, we will offer some of the lowest fees in the Canadian market, while at the same time, providing the most value relative to our fees to every investor, both small and large.
• Transparency: Openness is as important to us as it is to our investors, so we weaved an extraordinary level of transparency into our products. Not only do we have daily disclosure of our portfolio holdings, but we also disclose fees, investment strategy and portfolio statistics.
• Ease of use: We want everyone to be able to “Invest with Purpose” in a manner that is most convenient and comfortable for him or her. Our funds are available in both a listed ETF series and in mutual fund series, allowing any investor or advisor in Canada to access them.
• Tax efficiency: Minimizing tax is critical to long-term wealth creation. We designed our products under a unique corporate class structure, the first of its kind in Canada, to enable investors to switch between funds on a tax-deferred basis as their needs change, in addition to providing the normal tax efficiency of a corporate class structure. http://www.purposeinvest.com/purpose-investments-inc-launches-new-funds-and-revolutionary-fund-structure/
  • Asset Allocation

Asset parameters

WE HAVE EARNED AN UNSURPASSED REPUTATION FOR OFFERING OUR CLIENTS THE HIGHEST QUALITY OF CUSTOMIZED ASSET ALLOCATION STRATEGIES

SCM has earned an unsurpassed reputation for offering our clients the highest quality of customized asset allocation strategies. Our valued clients entrust portfolios of equity and fixed income assets in excess of $2 billion to SCM for supervision.

We provide our clients with the tools they need to understand their individual risk and return profiles and to develop strategic, long-term asset allocation programs. Assets under SCM supervision have grown considerably. Our successful investment approach is based on four fundamental principles:

1. Long-term performance is overwhelmingly influenced by strategic asset allocation.
   Studies show that more than 90% of a portfolio's performance can be attributed to its asset allocation. Our materials explain financial risk and can help participants prioritize their financial needs and assess their risk tolerance to help them develop a successful investment strategy.
2. Asset allocation requires an array of investments each representing one of the major asset classes.
   Diversification is more than stocks and bonds - it's knowing how much to allocate to each asset class, and having an array of asset classes to provide diversification. We have identified asset classes that will allow the asset allocation process to effectively diversify and give exposure to various investment styles and objectives within the broad categories of stocks, bonds, and cash.
3. Specialized expertise is required and disciplined investment objectives must be maintained to manage an asset allocation program.
   It has become increasingly rare to find a successful money manager who attempts to manage more than one specific investment style. Rather, top-performing money managers tend to direct their energies and expertise toward mastering one specific segment of the market. SCM believes that asset allocation can be best achieved through the selection of highly accomplished independent investment managers to manage each asset class.
4. Continuous monitoring of each manager is essential to ensure strict adherence to the investment objectives of each asset class.
   We monitor each manager's performance and investment style for adherence to the objectives of the assigned asset class and for the results produced in comparison with the performance of that asset class as a whole. Since our asset allocation process utilizes independent portfolio managers, we can be completely objective in the review and selection of fund managers for each investment style. We seek superior portfolio management and adherence to our criteria. When and if warranted, we can replace a fund or managers. This structure provides a mechanism for us to respond effectively to investment concerns without undue disruption to your asset allocation choices. http://www.stephens.com/capital_management/asset_allocation.aspx

% of Total Net Assets

Example

Real Assets

Domestic Stock 52.0%, Cash 2.3%, Convertibles 0.5%, Domestic Bond N/A, Foreign Stock 45.2%, Foreign Bond N/A, Options N/A, Preferred N/A, Other N/A, Net Assets ($M) $3,283.46, Turnover Ratio 46.80

Management Team

The fund offers a professionally managed allocation of assets, most of which will typically be invested in common stocks. http://www3.troweprice.com/fb2/fbkweb/objective.do?ticker=PRAFX

• Send’Or Capital Executives

Sendra Dorcé, Fund Manager

She is an expert financier specializing in national and international real estate investments. For close to two decades, Sendra has successfully worked in residential and commercial real estate for two of the largest banks in Europe and USA. She specialized in bridging buyers to their investment and development dreams. She has advised and coached individuals about financial and investments. She has conducted an unlimited number of valuable workshops and seminars attended by hundreds, teaching them the essential steps to increasing their financial worth. She says her purpose is to help others grow their net worth. She was president of a real estate finance company. A television show Host in Los Angeles “Let’s Talk Money” as well as a former radio show host on Real Estate Financing sponsored by Bank of American Mortgage, she holds a B.S. in psychology and Behavioral Sciences and an M.S. in Conflict Analysis and Resolution-Negotiations and an future MBA from Cass Business School in London.

Alex Mills-Asset Manager

He fosters profitable opportunities for international real estate investors worldwide. He facilitates wealth-building platforms for profit seeking investors through private student housing facilities to help them achieve their financial goals while increasing cash flow with various strategies. He is an expert consultant to those seeking guidance in multifamily, student accommodation, planning, as well as property management. He has established a benchmark for higher standards in student housing facilities. A leader in the field of education for over three decades, made a radical and successful transition to the property industry just before the transformation of the financial market. He has proven that opportunities are abundant no matter what the financial climate. Filled with honesty and filled with integrity, he now uses are his millions of dollar worth of expertise.

• Brokers
• Brokerage firm

Distribution brokers are selected individually for each client by looking at the underlying product and service level requirements.

Mini Prime Brokerage

A full service Mini Prime Broker

Funds with less than £75 million in assets have difficulty finding Prime Brokers to take their business, often faced with high minimums or second-rate service levels. Within Linear Mini Prime: smaller funds pay less for trading; get competitive pricing (with no minimums) by taking advantage of our consolidated flows and negotiating power. Linear provides tailored Prime Brokerage services to start-up, small and mid-size hedge funds not effectively serviced by the larger PB’s in Europe. You receive better servicing & pricing through our aggregated PB relationship plus legal & admin support, day to day support & execution. We provide an outsourced trading desk and DMA plus optional office space for those interested in Hedge fund hotel facilities.

Mini primes are viewed as an omnibus account aggregated to the prime brokers, allowing your firm to benefit from favorable pricing and servicing from the prime broker. Our prime brokerage provides; day to day, servicing, execution and support, with a service level that smaller firms cannot get from the larger prime brokers on a singular basis. Through Linear, you gain access to a global prime broker's electronic trading platforms and full brokerage services combined with Liner’s execution and trading platforms.

We provide operational support in setting up: legal, administration, and regulatory advice. In addition, we can provide an outsourced trading desk and regulatory support such as outsourced compliance. Access to office space and facilities is also an option in the context of a Hedge Fund Hotel. With access to multiple trading accounts, we provide one contact to track the different accounts. Essentially - we build an offering tailored to your needs

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Financial markets

• Primary financial equity markets
• Secondary financial equity markets
• NYSE
• London Stock Exchange
• Dow Jones Industrial
• S&P 500
• DAX
• HIS

Management fee

The benchmark and its drawbacks

Higher carrying and storage costs, increased transaction fees and lower liquidity, are some common drawbacks of real assets in relation to financial assets. 

• Investor return
• Interest alignment
• Performance fees

To be applied to investment

• Interest
• Brokerage fees Clients can connect directly to a linear distribution broker directly leveraging the proprietary linear execution rates.
• Investment fees

Fund Fees and Expenses

(COHEN & STEERS REAL ASSETS FUND, INC.)

Payment or fees given to hold the asset and investment, including operating fees

This table describes the fees and expenses that you could pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts on Class A shares if you and your family invest, or agree to invest in the future, at least $100,000 in Cohen & Steers funds. More information about these and other discounts is available from your financial intermediary. This regards how to purchase, exchange and sell fund Shares—Purchasing the class of fund shares that is best for you on page 34 of the fund’s prospectus (the “Prospectus”) and Reducing the Initial Sales Load on Class A Shares on page 87 of the Fund’s statement of additional information (the “SAI”).

Example

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the times indicated and then either redeem or do not redeem your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the Fund’s operating expenses remain the same and that the Advisor did not waive its fee and/or reimburse expenses after June 30, 2014 (during this period, expenses are based on the net amount pursuant to the contractual fee waiver/expense reimbursement agreement). Although your actual costs may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years

Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $581 $1,062 $1,588 $3,025

Class C shares

Assuming redemption at the end of the period . . . . . . . . . . . . . . . . . . $303 $ 837 $1,516 $3,329

Assuming no redemption at the end of the period . . . . . . . . . . . . . . . . $203 $ 837 $1,516 $3,329

(COHEN & STEERS REAL ASSETS FUND, INC.)

In our example, there is no allowance for transaction costs or brokerage fees. In order to minimize transaction costs, we rebalance the portfolio on a monthly basis, whereas 1-day slippage is included. By applying the maximum diversification approach, it is absolute necessary to determine the weightings of each asset class on a regular basis, since the correlation among asset classes is not stable over time. We have used a rolling variance/co-variance matrix to determine the optimal diversification weights.

If we have a look at the diversification benefits this portfolio has utilized in the past (Chart 1), we can see that the diversification ratio reached a maximum score of 6, meaning that the overall portfolio risk was reduced by 500 percent. In this specific period, the correlation among the underlying asset classes was extremely low. On average, the overall risk (Chart 1) within the portfolio was reduced by a factor of 2.7, while the minimum diversification factor had been 1.5 in September 2006. Apart from 2008, where the financial crisis hit the markets, the portfolio volatility itself swung between 2 and 9 percent, whereas the average volatility is around 5.5 percent. Since it is possible to put the most weight to each underlying asset class without increasing the total portfolio volatility, the expected returns of each security, and thus the expected return of the portfolio remains unchanged (Paul and Allen seeking Alpha 2012). Annual performance fees, which turn the gross investment return calculated and if there is performance related fee what is the benchmark.

• Is there drawback that is payable in cash or with units in the fund at the fund level into net investor level return. How is the management fee Fund Structure

General Information

The investment fund has a long-term growth strategy. It is investing at least 80% of its net asset in “real assets” and securities of companies that derive at least 50% of profits from, or commit at least 50% of assets to, real assets and activities related to real assets. This means assets that have physical properties, such as precious metals, energy and natural resources, real estate, equipment and basic material utilities and infrastructure, and commodities. The fund is authorized to sell holdings for a variety of reasons. Send’Or Capital Management, LLC, actively manages the Fund. the Fund’s investment advisor (the “Advisor”). The Fund’ advisor s anchors its strategy on its in-depth research into the historical performance, characteristics, and long-term fundamental outlook of real assets. They construct a diversified portfolio comprised of a combination of real asset classes to satisfy investor appetite.

Primary Investment Strategy

Send’Or Capital Global Real Asset Fund aims to achieve profitable total returns over the long-term. This will increase and maximize real returns during periods of inflationary environments for investors.  “Real returns as define by the Fund as total returns adjusted for the effects of inflation. The Fund pursues its objective offering exposure to “real assets” through investments, which it defines as the following:

• Tangible physical assets such as commodities, real estate, natural resources, gold and other precious metals, and infrastructure
• Companies that possess or derive a majority portion of their value from such physical assets or the production
• Many additional assets expected to perform well during periods of high inflation. Its investments will provide exposure to or investment in the following real asset classes:
  • Commodities
  • Real estate companies
  • Real estate investment trusts (“REITs”);
  • Precious metals
  • Infrastructures companies

Performance

Send’Or Capital Global Asset Fund has not been yet in operation for a full year of operation at the time of this report so the performance presented is only simulated and based on future projections.  Annual performance returns are helpful in painting a more realistic picture for the investor based on historical data. This highlights year-to-year returns while allowing investors to evaluate and monitor growth in comparison to the Fund’s appropriate indexes.  This is important in indicating whether the Fund’s average annual returns compare with those of broad measures of market performance. 

Returns

Rate of return

The Fund's objective is to maximize capital appreciation by investing primarily in real assets represented by “hard assets” which deliver above average earnings and revenue growth. It seeks also to achieve long-term wealth creation through generating attractive risk adjusted returns, while emphasizing the preservation of capital. To accomplish this, it will invest in real estate, commodities including precious metal and real asset ETFs in different markets.  It will be overweight in physical assets. The fund's unique strength is its combination of fundamental research and technical analysis. The primary focus is on capturing equity-value discounts identified by the executive team who seeks strong absolute investment returns regardless of the market’s direction primarily through investment

Total Trailing Returns

These calculations allow the investor to view the Fund’s revenue before expenses and taxes are remunerated. The gross figure is the total return of the investment.  

Standardized Returns

Net returns after tax and operational expenses

The following four mutual funds were chosen for their similarity to PRAFX, your selected fund. VHGEX appears to have the best combination of risk adjusted return and low cost with a Sharpe ratio of 0.79 and an expense ratio of 0.59%

Asset Allocation

Send’Or Capital Management, LLC has appointed a team, which consists of senior management (the “Allocation Committee”) to determine the percentage of the Fund’s assets to be allocated to each asset class within the allocation ranges set forth in the table below. On a periodic basis the Allocation Committee will review and may adjust the specific allocation ranges based upon its judgment of economic, market and regulatory conditions

Sectors

The Fund’s advisor intends to maintain the allocations within ranges, even though actual allocations may vary at any time and may move and remain outside of these ranges due to market movements, cash flows into or out of the Fund and other factors.  The range of asset allocation will be as follow

• Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-35%
• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-20%
• REITs . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-35%
• Gold and Precious Metals . . . . . . . . . . . . . . . . . . . . . . . . . 5-20%
• Infrastructure Companies . . . . . . . . . . .. . . . . . . . . . . . . . . .5-20%

Figure 1

The Fund also aims to be well diversified across regions see chart below.

The Fund expects that it will achieve a significant portion of its exposure to commodities through investments in Send’Or Capital Global Real Assets Fund, LLC

Fund Fees and Expenses

When an investor buys and holds shares in the fund the fees and expenses that they will pay are clear and transparent based on expenses incurred to maintain the assets. The fees, costs, and expenses linked to the authorization and incorporation and establishment of the Fund, the offer of Shares, the preparation and all printing of this literary material including the prospectus and the fees of the professional advisers to the Fund in connection with the offer will be incurred by the Fund. A shareholder can qualify for a scalable discounts should they want to invest as a group or with other family members. Fees can also be adjusted at a future date should they refer other investors who acquire a minimum of $100,000 share value.

Management Fee

It is a charge incurred by the fund in order to compensate the executives in charge of the Fund management including those involved in asset acquisition and management. Such fees usually range from 1-2% for mutual funds.

Expense ratio- This ratio help to monitor the proportion of returns, which are being allocated for, operate as well as maintain the assets held by the Fund. This ratio is also a reflection on the management team as to how well they are meeting the responsibilities and obligation as it pertains to the Funds. This section reflects what is being paid per year for fees, and is calculated by dividing total expenses by the total value of the Fund. The expenses may or may not include marketing, print, and advertising cost and commissions.

Open Ended

This Fund is an Open End Fund, which will generate more share as more are bought. As opened to the Closed-End Fund, model which as a fix number of shares as in the case of REITs and ETFs.

No load

 The Fund is categorized as a No Load Fund as it will not incorporate any transaction fees at the time of purchase of its shares.  This varies from fund to fund and some of our competitors have charge as high as to 6% up front.

Redemption fee

 Investors will incur a 2% penalty for early existing. This is based on 90 days early dissolution of shares. 

The table below highlights the fees and expenses the fund will incur as a charge to the investor.

Risk

Investors may want to consider risk factors such as market, political, country, currency, and equity investment risk before investing.  There is always new potential risk in the horizon so investors are advised to remain aware of all factors, which may negatively affect their investments in the future.

Fund Advisor

Send’Or Capital’s mission to bring investors with varied appetites to opportunities that can lead them effectively to increase their returns through successful diversification strategies in global markets. Our executive team invest time and resource in the due diligence process to mitigate uncertainties and risk. Send’Or Capital offers investors pre-sourced, debt free residential and commercial (multi-unit, and student accommodations) properties, as well as granting them direct investing opportunities in the Global Real Asset Fund. Private lending services are part of service offering investors. This creates a unique vantage point to be able to offer maximum value to our clients whilst minimizing their efforts.  We have direct access to unlimited inventory products through our partners globally. We have also secured the sole rights to bring them to our investors as well sourced, and hindrance-free investment opportunities.

Fund Distribution

Brokers of the Fund are third financial party intermediaries who provide access and information to investors.  They can guide regarding the process involved in how to purchase, exchange and sell shares of the funds. Their fees are completely separate and additional to those of Send’Or Capital Global Asset Fund. They are regulated bodies and mandated to disclose such fees on their literature and their online platforms.

Management Team

Send’Or’s management team is expert in global investments.  The team utilizes this experience to identify investment opportunities, which may not be apparent to more traditionally trained investment professionals. They select prime real assets in increasingly profitable locations that offer above-average returns.  Site visitations by our expert teams on the ground are a significant part of the evaluation process. Our investors benefit from real estate investment offerings at below market prices, which yields lucrative returns. Our investor clients benefit from an end-to-end solution. Send’Or Capital offers 'armchair investments' for busy people who want little to do except watch the profits grow! This is includes the Global Real Asset Fund opportunity which will provide them the option of not having to be burdened with the maintenance of a physical assets.

Sendra Dorcé- Fund Manager

An expert financier for close to two decades, who specializes in global real asset investments, is famous for her value based investment strategy. She has successfully invested and helped others to invest in real estate while facilitating leverage via two of the largest European and American banks. She specialized in bridging buyers to their investment and development dreams. She has advised and coached individuals about financial and investments. She is skilled at both fundamental and technical analysis which help her analyze real assets investment opportunities including determining the best strategy for leverage (equity and/or debt financing). She is proficient at structuring and closing new investments deals as well as knowledgeable of financial markets. She exceeds client expectations with returns on investments and successfully raises capital and attracts accredited investors she was president of a real estate finance company. She is skilled at reviewing platforms for new, existing, and potential investment products. She hosted a  television show in Los Angeles “Let’s Talk Money” as well as a former radio show host on Real Estate Financing sponsored by Bank of America Mortgage, she holds a B.S. in psychology and Behavioral Sciences and an M.S. in Conflict Analysis and Resolution-Negotiations and a future MBA from Cass Business School in London.

Alex Mills- Acquisition Manager

His approach outlines risk, returns strategies, and allows for greater scope and confidence in investment decision-making also characterized by his generation of rigorous testing of trading ideas across multiple markets and historical cycles to determine profitability and applicability. His risk controls help protect investor's capital through analysis and rules-based decision-making. He facilitates wealth-building platforms for profit-seeking investors through “hard assets” while increasing cash flow with various strategies. He is an expert consultant to those seeking guidance in multifamily, student accommodation, planning, as well as property management. He possess extensive experience in conducting market research and implementing new investment product and strategies  His talents and skills include critical thinking capabilities and aspiration to cultivate lucrative solutions. He helped build a $100 million real asset acquisition business from the ground up;   He graduated from the Wharton School of Business with his MBA in finance, holds an MA from the University of California at Santa Barbara and an MBA from New York University.  He completed his Bachelors degree at New York University.

Jane Smith - Asset Manager

Has 20 years of asset management experience in the globally.  She leads her team in overseeing the management of all of Send’Or Capital’s real estate properties, which include both residential and commercial.  She manages 15 staff members in locations situated complementary to our preferred targeted strategic investment areas.  She is responsible for determining the feasibility of asset acquisition and presenting supporting documentation to upper management. She completed her undergraduate studies at the University of California, Berkeley in Business Administration.

Investment Process

Shares

Shares are to be issued in small and larger increments. There will be 100,000 smaller denominations. A minimum investment value is required in order to execute and acquire shares and there is no maximum.

Share Buying and Selling

The acquisition and selling of shares may be facilitated Send’Or Capital directly or through a professional broker, advisor or other intermediary. Any third party transaction must be with a regulated entity.  Any intermediary who recommends an investment in or execute a order for the Fund can have an ongoing commission, based on the value of Shares held may also be paid to qualifying intermediaries.

Drawback

The drawback of a mutual fund is that unlike stocks, one does not know how it is performing until it is too late. Meaning the mutual fund investing in real assets holdings will have round the clock expenses, which are not being reported on a daily basis to investors. In addition, a mutual fund is comprises of different stock and its performance will depend on how each individual stock in the basket is performing.

6- Conclusion

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Conclusions

Crowdfunding a bipartisan group of senators is pushing the Securities and Exchange Commission to propose rules that would allow startup companies to raise capital from investors online. A provision that eased securities registration requirements for small companies was included in the Jumpstart Our Small Business Startups Act when Congress passed it in April 2012. The SEC was to have proposed rules for so-called crowdfunding within nine months of enactment. The commission is now 8½ months past that deadline. Supporters say the law makes it easier for entrepreneurs to find investors and raise money to launch companies that will create jobs. State securities regulators and other skeptics have warned that JOBS Act changes could leave investors vulnerable to online rip-offs.

http://www.investmentnews.com/article/20131021/FREE/131029982?utm_source=indaily-20131021&utm_medium=in-newsletter&utm_campaign=investmentnews&utm_term=text#

The strategies, which will help in the investors in getting higher returns

Higher demand for gold has been expected from emerging market economies like India and China as well as inflation related concerns due to high oil prices, support gold prices in the short to medium term. One needs to have at least 5 to 10% allocation to gold as part of their long-term asset allocation. Finally, gold is certainly a good investment to have as a small part of your as its value has been continuously rising for many months now. Strategy underlying investing in gold should be very systematic in approach - one can invest a small percentage of savings in it, hold until the price appreciates substantially, and then sell it for a considerable profit, before it starts falling in value. However, this course of action is only recommended if you are ready to take the inherent risk of price fall. If you are a defensive investor, a period of rising prices is not good time to buy. Overall, it depends upon the end investor analysis and degree of willingness to take risk in any investment avenue.

Gold is considered the most preferred metal for hedging against inflation, deflation, or currency devaluation. If the returns on bonds, equities & real estate are not adequately compensating for risk and inflation then the demand for gold and other alternative investments (such as commodities)increase. The phenomenal rise in the value of gold has been a by-product of global recession as investors are looking for safe products to place their funds in. International prices are hitting historic highs.

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