The Markets September 25, 2012

North American Investor Confidence Declines

North American investor confidence continued to decline this month, according to State Street Global Markets.
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The State Street Investor Confidence Index (ICI) for September 2012 found that the Global ICI fell from August’s revised reading of 91 to 86.9. North American investor confidence fell 3.2 points from August’s reading of 84.3 to end at 81.1. Asian investors followed suit, with the Asian ICI declining 5.6 points to 87.6. European investors were the exception, with an increase in risk appetite leading the European ICI up by 4 points from 101 in August to 105 in September.

“This month’s decline in global investor confidence is the result of diminished risk appetite among both North American and Asian investors,” said Kenneth Froot, a Harvard University professor who developed the Investor Confidence Index alongside Paul O’Connell of State Street Associates. “While diminished growth expectations for Asia account for some of the reticence in that region, the third consecutive decline in confidence among North American investors is more puzzling, especially given recent announcements by monetary policy makers on both sides of the Atlantic. It is clear that in their actual portfolios, institutional investors continue to exhibit caution given the global growth backdrop.”

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As with last month, emerging markets continue to attract some positive inflows, O’Connell added.

The State Street Investor Confidence Index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral—the level at which investors are neither increasing nor decreasing their allocations to risky assets. 

 

Products September 25, 2012

Four Portfolios Beef Up LPL Platform

LPL Financial LLC added two portfolios from LPL Financial Research and two managed alternative investment portfolios from Fortigent to its Model Wealth Portfolios (MWP) platform.
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This expansion provides access to the two models designed by LPL Financial Research using a proprietary quad-core approach to create bond-like exposure without holding bonds, as well as Fortigent’s alternative strategy models, which are designed to capture performance with lower volatility.

The Quad-Core Balanced and Quad-Core Income Portfolios from LPL Financial Research extend the proprietary “Quad-Core” strategy that is currently offered on the MWP platform through the Absolute Return Portfolio.

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The Quad Core, a four-pronged methodology intended to provide a more diversified approach to portfolio management, includes allocations to the opportunistic ideas of LPL Financial Research and the diversifying ideas from other managers to drive alpha and income, and then leverages non-correlated alternative strategies and hedging strategies to control the beta, or market sensitivity, of the portfolios.

The Quad-Core Income Portfolio seeks to replicate or beat the performance of core bonds while generating more income, and the Quad-Core Balanced Portfolio seeks the return of a traditional 60/40 stock-bond portfolio with little or no sensitivity to rising interest rates.

Fortigent, a provider of wealth management solutions to advisers serving the high net-worth market, is a wholly owned subsidiary of LPL Financial.

 The Fortigent portfolios enable LPL Financial-affiliated advisers to benefit from Fortigent’s background and expertise in alternative investments. Advisers can offer the diversification and risk-management benefits of alternative investments strategies with the liquidity and transparency benefits of mutual funds. The two portfolios—the Alternative Strategies and Alternative Strategies-Enhanced portfolios—are geared to capture the performance of traditional equity/fixed-income portfolios, but with lower volatility, reduced potential for loss of capital and lower correlation with other asset classes.

The LPL Financial Research portfolios and the Fortigent alternative investment strategies will allow advisers to address a wider range of client needs, while accessing the diversification and risk-management benefits that come from non-correlated alternative strategies, said John Moninger, LPL Financial executive vice president of advisory and brokerage consulting services. “As financial markets continue to evolve, LPL Financial is committed to providing our advisers with the strategies they need to help their clients progress toward their long-term goals,” Moninger said.

“In this volatile environment, advisers and their clients are looking for strategies that offer the potential for consistent returns along with attractive risk characteristics and diversification benefits,” said Scott Welch, senior managing director, investment research and strategy for Fortigent.

 

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