Jeffrey P. Davis, CFA
Chief Investment Officer
LMCG Investments
Alternative Viewpoint
It was with great sadness that I heard of the passing of David Rockefeller in April. I had the good fortune to serve as the Chief Investment Officer of Rockefeller & Company, the multifamily office that thrives today. The firm and David Rockefeller’s family embodied a great mix of people, philosophies and styles, with the singular goal of stewarding the family’s wealth for future generations and the causes they value. The imprint of the Rockefeller family values lives on among many like me who were fortunate enough to be touched by the Rockefeller legacy.
My time working with a multifamily office coincided with the collapse of the technology bubble, when stresses on the most traditional and conservative approaches to portfolio management were felt the most. Yet, for all the challenges to traditionally managed stocks and bonds during that period, the great benefit of using alternative investments when public equity markets unleashed the force of a bear market offers guidance for today. The financial crisis of 2008 also proved that certain alternative investments could add stability to a family office’s allocation.
As the U.S. equity and bond markets continue their trek into new valuation territory, we urge investors to explore alternative approaches to diversifying portfolios and discover more sensible investment opportunities than offered by traditional investments.
The world of alternatives includes a wide range of investing approaches. Don’t be intimidated—the spectrums of risk can be readily identified today, particularly among liquid alternatives. If investors focus on four key elements of risk, we believe appropriate alternatives can be identified: low correlation to equity and bond markets; limits on leverage, which can amplify losses; directional or timing-based alternatives, which may not diversify risk elsewhere in the portfolio; and multiple sources of alpha, which provides important diversification.
The opinions herein are those of LMCG’s Chief Investment Officer, are made as of the date of this material, and are subject to change without notice. There is no guarantee the views and opinions expressed in this communication will come to pass. It is for discussion purposes only, since the availability and effectiveness of any strategy depends on each client’s facts and circumstances.
LMCG Investments, LLC (LMCG) offers a broad range of investment strategies to a wide variety of clients, including institutions, family offices and individuals. Our firm has been built by attracting talented investment teams that bring extensive experience and specific expertise in their respective market segments and investment strategies. We recognize that independent thinking drives investment performance and we reinforce the autonomy and integrity of our investment teams.
LMCG manages equity portfolios across a range of market caps, investment styles and geographies. We also manage fixed-income portfolios as well as liquid alternatives. Our investment teams, together with our leadership, operational, compliance and client service teams, share the common goal of delivering superior investment performance to our clients.