Investment Perspectives

Each quarter we explore a topic that we believe is relevant for our clients in understanding the current investment environment and the markets.

Comments on Fixed Income Market Dec

Given the recent volatility in fixed income markets and negative media coverage, Aureus felt it important to offer the following commentary. While fixed income returns remain slightly positive for the year, bonds have lost most of the gains achieved from May through September. Fear of inflation and concerns over deficits, at the federal and municipal level, have exacerbated the situation.

Asset Allocation 2010

The Aureus base case asset allocation model for 2010 presents what we believe to be an optimal asset mix for our clients over the next two to three years. Given present uncertainties in today’s world economies and markets, we realize that making any long-term prediction is more than usually difficult.

Client Letter: Investment Perspectives Employment

Jobs, or lack thereof, are on everyone’s mind. Persistently high unemployment in the developed world has been a hallmark of the financial crisis and ensuing recession. While the recession in the US officially ended fifteen months ago, unemployment remains stubbornly elevated.

Client Letter-Perspectives

Only a year ago, following the bankruptcy of Lehman Brothers, the world appeared on the brink of a financial collapse that threatened to lead the real economy into a deflationary spiral. Today, the picture is very different. Global stock and bond markets have recovered very close to October, 2008, levels and the real economy, still reeling from the worst recession since World War II, is showing initial signs of improvement.

Client Letter-Perspectives

For much of the past several decades, fixed income investments had lower volatility and lesser returns than equities, and importantly acted in the market differently than equities. In 2008, everything changed. With the significant exception of Government bonds, many fixed income instruments became highly correlated with the stock market and produced negative total returns, thereby not protecting broadly diversified portfolios as much as past experience would have indicated.

Asset Allocation 2009

Aureus has updated its base case asset allocation model for 2009. Modifications to our model were more pronounced this year than in our updates for 2007 or 2008. Notable adjustments are a larger allocation to fixed income and reduced allocations to Europe and emerging markets excluding Asia. Each Aureus client continues to receive an individualized portfolio design with respect to specifics regarding tax, income, liquidity, risk profile and family structure

Client Letter-Perspectives

During the past twenty-five years, the US led the world in an economic direction notable for great acceptance of risk, increased leverage, and an emphasis on short-term profits. While one consequence of this strategy was apparent worldwide wealth creation, this was built on the illusory belief that the scaffolding holding up world economies was solid, and that the support structure would withstand some disruption.

Client Letter: Investment Perspectives

Performance of nearly every asset category suffered a sharp decline in the third quarter, with the exception of cash and US Treasuries. Diversification, either geographically or by asset class, failed to protect investors. Aureus Asset Management was not immune to these bear market pressures.

Client Letter: Investment Perspectives

Fundamental market forces are the primary factors behind today’s high price of fuel. Emerging countries now represent approximately 50% of world oil demand and their appetite for fossil fuels should continue to be strong over the long-term. World supply has become less responsive, creating a tight market for oil.

Client Letter: Investment Perspectives

Since the late 1990s, many emerging countries have taken advantage of a global boom to accumulate vast reserves of foreign currencies. Until recently, most of these reserves were invested for safety and liquidity. However, a growing number of countries have recently demonstrated a willingness to invest a portion of their wealth in long-term assets.

Archived Investment Perspectives