The Covid-19 crisis is giving advisors the opportunity to help clients pandemic-proof their portfolios, according to two investment managers interviewed by Financial Advisor.
“Financial advisors are on the frontline and can assist investors with preserving their wealth” through active management, said Chad Glauser, founder of Alpine Quantitative Management, an investment manager in Denver with a minimum investment requirement of $1 million.
Alon Ozer, chief investment officer for Omnia Family Wealth, a multifamily office based in Aventura, Fla., added that advisors need to re-evaluate portfolios based on macro-economics rather than on individual sectors of the market and traditional models.
“Market changes are happening rapidly today” and only major changes are gaining attention, Glauser said. “A change of 1% to 2% doesn’t even raise an eyebrow today.”
Alpine Quantitative Management, which opened to the public in December after nearly five years of test investing, starts with the basic model of conservative growth in good times, but almost no losses in chaotic times like the present, Glauser said. The fund invests in U.S. Treasurys and the S&P 500 and will not change that mix.
“We win by not losing,” he said. The fund lost only 73 basis points in March and 63 in basis points in February. “That way [when the market turns around] we do not have to make up so much.”
According to Glauser, many people flee to cash when market panic sets in, which is a position Alpine will never take.
Ozer noted that to pandemic-proof a portfolio, an investor should rely on a macro-economic strategy, eschewing traditional investment models and looking to the overall economic health of a given country or region.
“In 2019, the U.S. market got very expensive, so we developed our own model,” Ozer said. “We also learned in 2008 that when a crisis hits, many investors have a liquidity problem. People sell and all assets fall in value at the same time.”
Long-term Treasurys are advantageous when the market tanks in the short-term, Ozer said. Technology, health care and biotech also have the ability to weather market problems.
“The traditional model of fixed income, equity, private debt, private equity and venture capital is not going to help you in a panic,” he added. “That model is broken at this point in time. The way to invest is to base investments on the economic environment” of a given area.
Real estate as an investment will have to be reassessed after Covid-19. “Whatever worked in the past 10 years may not work in the next 10 years,” Ozer added.
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