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Goal-Based Allocation Strategies for Family Offices

Posted 16th April 2010.

Interview with: Jean Brunel, Managing Partner, Brunel Associates; Editor, Journal of Wealth Management; Author of Integrated Wealth Management

Montreux, Switzerland, April 16, 2010 – FOR IMMEDIATE RELEASE

Creating lasting wealth continues to dominate the agendas of family office investment officers and directors, but evaluating risks and ensuring investments prove profitable require cautious planning and long-terms strategies. Breaking the portfolio into different components and designing each to meet a goal set by the wealthy client is one strategy that Jean Brunel, Managing Partner at Brunel Associates recommends for safeguarding the family against possible economic nightmares. A speaker at the marcus evans Elite Summit 2010 taking place in Switzerland 26 28 May 2010, Brunel shares his thoughts on goal-based based allocation and investing in emerging markets.

What are some of the challenges facing family offices in Europe and what solutions would you recommend?

Jean Brunel: This is the single most challenging investment environment that I have ever seen, and I am not entirely sure that investors today fully appreciate what they are facing. This is not a forecast that markets are about to crash, but an observation that the range of possible outcomes are exceptionally wide. There appears to be a significant gap between perception and reality. Governments are loaded with debt, but it is not obvious to me why countries such as Greece and Portugal are considered to be in a worse shape than the US. How are we going to address the challenges if we are not willing to acknowledge that we are facing any?

Some of our wealthy clients have a more negative investment outlook, therefore I try to make them realise how silly it would be to have their entire wealth in cash, considering the opportunities they could miss. Other families have a more rosy perception therefore I try to give them a more realistic view.

There have been times in the past several decades when investors were able to have a reasonably clear view of how investments could perform, but we are not in such a situation now. Humility and identifying between when you know something and when you do not, is one of the most important attributes to have. Sir John Templeton once said that he had never seen an investment manager who was right more than 65 per cent of the time; that means that even good investors can be wrong 35 per cent of the time.

What investment strategies would you recommend?

Jean Brunel: We have developed the concept of goal-based allocation whereby the portfolio is broken down into different components so that each piece can be designed to meet one of the familys goals. This is against the argument that families have only one goal. With this concept, it is easier to put a portion of the familys asset into a series of strategies meant to protect the family against economic nightmares.

I would recommend investors to divide the portfolio into various components, various goals, and recognise that they cannot afford to invest into long-terms strategies in the index managed or actively managed private equities, fund of hedge funds, commodities, bonds, and so on. A portion of the portfolio could be for the longer term, but they must not have a portfolio that is completely illiquid. Dividing the wealth helps identify where liquidity is needed and where they can afford a long-term strategy.

What are some of the attractive opportunities to invest in?

Jean Brunel: I do not have confidence in any individual investment opportunity, but if I think on a ten to 15 year time frame, there are many areas likely to see significant gains. Asia (excluding Japan), parts of Latin America, Mexico and Brazil have learnt that they need to create domestic wealth for their people. Given a longer time frame where any volatility in that period would not be an issue and I could go to an island for 10 years without anyone asking me how the portfolio is performing, I think investing in those countries would probably be as good an idea as any.

As these countries develop, we are also going to experience a supper commodity cycle. The increase in demand and consumption of commodities will cause prices to go up. If in ten years half of the world goes from poverty to an average standard of living, the demand for commodities will be enormous. The combination of investing in commodities and investing in those countries looks to me as a winning combination.

Contact: Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division

Tel: + 357 22 849 313
Email: press@marcusevanscy.com

About the Elite Summit 2010

This unique forum will take place at the Fairmont Le Montreux Palace, Montreux, Switzerland, 26 – 28 May 2010. Offering much more than any conference, seminar or trade show, this exclusive meeting will bring together esteemed wealth management industry thought leaders and solution providers to a highly focused and interactive networking event. The summit includes presentations on establishing an effective governance framework, tax optimisation strategies, managing risks and maximising investment returns.

For more information please send an email to info@marcusevanscy.com or visit the event website at http://www.elitesummit.com/JeanBrunelInterview

Please note that the summit is a closed business event and the number of participants strictly limited.

About marcus evans Summits

marcus evans Summits are high level business forums for the worlds leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-to-one business meetings. For more information, please visit http://www.marcusevans.com

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