The Markets May 23, 2011

Report Says It May be Time to Consider Real Assets

State Street’s SPDR University suggests that investors would be well-served to start thinking about how exposure to real assets can help position their portfolio for rising inflation.
Reported by

The report, “Real Assets, Inflation Protection Solutions with Exchange Traded Products,” says that with rising food and gas prices slowly beginning to push inflation higher, real assets such as TIPS, Real Estate, Commodities, Natural Resources, Infrastructure, etc., can be more successful than stocks and bonds, which tend to generate meager returns during periods of rising inflation.

Because of stock volatility and historically low yields for bonds, investors may seek to generate positive returns by investing in assets that are potentially driving inflation, such as oil, or providing portfolio diversification during turbulent economic times, such as gold. “These real assets have historically outperformed stocks and bonds during periods of accelerating inflation and provided additional potential diversification benefits for investors seeking to control portfolio volatility, according to research and analysis,” the report said.  

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A blend of real assets has historically demonstrated the ability to provide significant inflation protection for suitable investors. According to the report, from 1970-2010, a portfolio of 20% inflation-protected bonds, 30% real estate investment trusts (REITs), 25% commodities, and 25% global natural resources stocks has resulted in significantly higher returns than stocks and bonds in periods of rising inflation. In periods of stable inflation, the blend of real assets offers comparable returns to bonds and commodities. In periods of declining inflation, the real assets blend significantly outperforms commodities.  

The report contends a real asset strategy can be easily implemented using exchange-traded products, including exchange-traded funds (ETFs) and exchange-traded notes (ETNs). A real assets blend could be implemented using ETFs as follows:  

  • 20% Inflation Protected Securities ETFs (TIPS), 
  • 30% REITs ETFs (15% US REITs, 15% non-US REITs), 
  • 25% Natural Resources/Energy ETFs, and 
  • 25% Commodity ETFs (15% broad-based commodity, 10% gold). 

More about SPDR University is at http://www.spdru.com.

Deals & People May 23, 2011

Firms Merge to Form Alternative Investment Manager

Saguenay Capital and Strathmore Capital announce their merger to form Saguenay Strathmore Capital, a global alternative investment manager.
Reported by

Saguenay Strathmore Capital (SSC) will focus on customized fund of hedge fund portfolios with offices in New York, London and Toronto.

Saguenay Capital, based in New York, was established in 2002 by Brian Walsh and David Dobell to manage bespoke alternative portfolios for a client base of international institutions and family offices. Its investment team has worked together for over 20 years at Saguenay and prior financial institutions.   

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Strathmore Capital, based in London, was founded in 2003 by Stephen Harper to provide alternative investment advice and portfolio management to large institutional investors. Since inception, Strathmore has worked in partnership with its clients to develop a highly transparent investment process and bespoke reporting.  

According to the announcement, Brian Walsh, former co-Head of the Global Investment Bank at Bankers Trust becomes Chairman and Chief Investment Officer, and Stephen Harper, former Bankers Trust Senior Managing Director, becomes Chief Executive Officer. David Dobell and John Murphy, who become co-Heads of Research, are also ex-Bankers Trust executives. Emlyn Palmer becomes Chief Operating Officer of SSC.  

Completion of the transaction is subject to regulatory approvals and is expected in July 2011.

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