Altfest Advisory Fall 2015

personal wealth management
Fall, 2015
SM
Page 1
THE ALTFEST ADVISORY LETTER
445 Park Avenue, 6th Floor New York, NY 10022
Loans: Thinking
Beyond the Mortgage
W
hen a client
was
looking to buy
a building to expand
his business, conventional wisdom might
have suggested a down
payment and a busiby: Steven Cadoff
ness real estate loan.
CFA, CRPS®
Instead, we suggested
a pledged asset line,
secured by liquid assets that we manage. As a
result, he was able to finance the entire purchase at an attractive rate, avoiding sale of assets and potential capital gains.
Used properly, loans can be a vital tool in
your financial arsenal. In many cases, the
loan will be a mortgage. But in some cases,
as with our client, loans secured by assets
within your taxable investment portfolio may
(Continued on page 2)
Phone (212) 406-0850 Fax (212) 406-0867 www.altfest.com
Insight Into the Altfest
Investment Analyst Committee
A
t Altfest Personal Wealth Management, reviewing
and optimizing your portfolio to ensure its maximum
performance is one of the many important activities
we do for our clients. In this issue, we’d like to give
you a backstage pass - an opportunity to understand the behindthe-scenes process that informs that performance.
Most of the give-and-take that occurs between your advisors
and Altfest’s team of investment analysts takes place at meetings
of the firm’s Quarterly Investment Analysts Committee. Last
month, everyone from senior principals to client advisors and
even summer interns assembled to hear seven of the firm’s
investment analysts present macro overviews of their individual
areas of coverage - Domestic Large Cap and Domestic Small
Cap Equities, International Equities in both developed and
emerging markets; Alternative Investment vehicles including
Real-Estate; and International Bonds, Fixed Income and
Municipal Bonds - to the firm’s Portfolio Action Group.
Tracking progress against past projections and setting new
projections for the next quarter, they explained the strategy of
each investment’s managers and discussed ongoing research
assignments. Using their expert insight into the state of the
international economy, they focused on how it will impact the
mutual funds and alternative investments under consideration.
And there were plenty of questions from fellow analysts and
advisors as they listened attentively to the comments, which
often disclosed signature trading habits of well-known portfolio
managers.
In fact, three separate entities contribute to decisions about
what will change or stay the same in your portfolio. Working
closely with our team of expert analysts, the four-person
Portfolio Action Group provides feedback, develops investment
strategy, and initiates projects. Following the quarterly analysts’
meeting, the Investment Committee formally approves and/or
votes on changes to the firm’s holdings.
Karen, Lewis and Andrew Altfest pose for
a photo at our Annual Event Reception,
held this past June at The Princeton Club.
After the recent meeting, the Investment Committee decided
on a number of changes aimed at increasing the value of client
portfolios. In keeping with our value-oriented investment
(Continued on page 3)
The Altfest Advisory Letter
Page 2
Loans: Thinking Beyond the Mortgage
(Continued from page 1)
be more appropriate. Many people are familiar with
margin loans, which can be used to purchase additional
marketable securities. Less well known are pledged asset loans, which must be disbursed from the account
and used for purchase of a home, boat, business investment, etc. Pledged asset loans typically have higher
loan-to-value ratios than margin loans - you may be eligible to borrow 60% of your stock portfolio with a PAL,
compared with 50 percent with a margin loan.
future but need to pay taxes now. You may not want to
sell assets in your account where you could realize capital gains, creating more taxes. A securitized loan could
be a useful option by utilizing it to pay your current tax
bill and then paying off the loan when your cash flows
are realized.
Loans can also be invaluable to business owners and
entrepreneurs. Suppose your dental practice has a
need for a large capital outlay
Structured properly, a securitized
that will be recouped by the
loan can help meet short term obbusiness over the short to inStructured
properly,
a
ligations. It is important that the
termediate term. Instead of
loan-to-value ratio be reasonable,
selling assets and potentially
securitized loan can help
because if it is too high a market
disrupting your asset allocation
meet short term ob­ligations.
decline could result in a forced sale
and incurring capital gains,
of assets (margin call) to meet the
a securitized loan may make
loan obligation. We will help you
sense.
structure your loan appropriately so that the risk of a
These are just a few instances where a securitized
margin call is minimized.
loan can be of great benefit to you and your portfolio.
Why a PAL instead of a mortgage? For one thing,
Of course, mortgages and home equity loans have their
interest rates are often much cheaper for securitized
own advantages, one being that the interest can be deloans than for mortgages, potentially by one to two perductible, depending on the circumstances. Mortgage
centage points. Lower rates can make a big difference
rates remain relatively low, and if you’re wondering if
in dollar terms especially for large loan balances.
you might benefit by refinancing, we can help you figure it out.
In cases where you may only have a short time period
left on your mortgage, the costs to refinance the mortAt Altfest, we can advise you on the various options
gage may be prohibitive. Or perhaps you don’t wish to
to meet cash flow needs. We’ll outline the potential
extend the mortgage for a longer period. A securitized
benefits and drawbacks of each approach so that you
loan may be an opportunity to pay off the mortgage in
can make the decision that is right for you.
full at a lower interest rate. The payback schedule for a
Steven Cadoff is a Senior Financial Advisor at Altfest, advising
securitized loan is flexible; it can be paid back over time
clients on all aspects of their financial lives. Steven has earned the
or in a lump sum.
Tax efficiency is another potential consideration.
Suppose you will be receiving cash flows in the near
Chartered Financial Analyst (CFA) and Chartered Retirement
Plan Specialist (CRPS) designations. He is a member of the New
York Society of Securities Analysts and the CFA Institute.
Altfest Supports: The New York Common Pantry
I
n appreciation for referring your friends, colleagues, and family members to Altfest Personal
Wealth Management®, we will make a donation to New York Common Pantry (NYCP). New York
Common Pantry is an organization in East Harlem that Karen Altfest helped found and lead as the
first Chairperson three decades ago. NYCP now distributes 2 million meals a year in take home bags
of groceries, meals served onsite, and many other related services, including nutrition education, to
needy New Yorkers. For more information about the New York Common Pantry, visit their website
at www.nycommonpantry.org.
The Altfest Advisory Letter
Page 3
Insight Into the Altfest Investment Analyst Committee
(Continued from page 1)
style, for example, committee members voted to
maintain a large international exposure as some
areas of international equities are more reasonably
priced than their domestic counterparts.
mid-cap funds currently held in portfolios.
While some alternatives, like opaque mortgagebacked securities, made negative headlines in the
recent past, he emphasized that the committee’s
Said Executive Vice President Andrew Altfest
goal is to add the strategy, not the category.
- who serves on both the Investment Committee
They are particularly examining event-driven
and the Portfolio Action
alternatives
such
as
Group - “Because we find
merger arbitrage that they
that investments are more
believe will perform well
Three separate entities
compelling
outside
of
in the current market.
contribute to decisions about
the United States, we’re
Gold mining stocks were
what
will
change
or
stay
the
overweight
in
Europe.
another investment that
We’re also adding exposure
was discussed. “As prices
same in your portfolio.
to emerging markets and
plummeted, we’re also
looking at emerging markets
closely monitoring gold,”
debt.”
Andrew added, “and we’ll
maintain exposure to non-agency mortgage market
Citing concerns about rising U.S. interest rates,
bonds which have done well for us, because they
the committee decided to maintain a relatively
are attractively priced relative to other bonds and
short-term bond exposure. Analysts are also
through them we can manage interest-rate risk”
spending more time researching alternatives,
that “We feel are less risky than stocks but with
In short, concerns about rising interest rates,
potentially more return than bonds,” Andrew
the rejiggering of investments within international
noted. In one instance, the committee is looking
markets and the interest in alternatives constitute
at an alternative investment to replace one of the
what Andrew Altfest calls “big changes” for the
firm and client portfolios.
The Complimentary
Altfest Portfolio Review
Thanks to your backstage pass, you heard it here
first.
S
pecifically designed
for family, friends,
and colleagues of Altfest
clients, an Altfest
Portfolio Review is
essential to help ensure
hard earned dollars are
working their hardest.
An Altfest Portfolio
Review can help identify portfolio vulnerabilities
that can prevent your family members, friends and
colleagues from achieving important financial and
life objectives. Why should you recommend Altfest
Personal Wealth Management® ? Because at Altfest,
we take no commissions; we offer no products to sell;
and therefore, we provide independent investment
reviews, advice and recommendations. If you know
someone who would benefit from an Altfest Portfolio
Review, please contact us at 212-406-0850 today.
You are invited to visit the new home of
Altfest Personal Wealth Management
Light refreshments will be served
Altfest Personal Wealth Management
445 Park Avenue, 6th Floor
Call 212-406-0850 to RSVP
personal wealth management
SM
445 Park Avenue, 6th Floor
New York, NY 10022
(212) 406-0850 Phone
(212) 406-0867 Fax
www.altfest.com
The Altfest Advisory Letter
IN THIS ISSUE:
• Insight Into the Altfest Page 1
Investment Analyst Committee
• Loans: Thinking beyond Page 1
the mortgage
• Save the Date
Page 3
E-mail [email protected] to request an extra copy
of this newsletter for a friend or loved one.
The Altfest Advisory Letter
Page 4
Altfest Personal Wealth Management: In the News
j The Financial Times again named Altfest
Personal Wealth Management® one of the 300 Top
Registered Investment Advisors in the Nation.
k For the fourth straight year, Altfest Personal
Wealth Management® was named a Leading
Registered Investment Advisor by Financial
Advisor magazine.
l Lew Altfest was again named to the ranking
of the Top 100 Independent Financial Advisors in
the Nation by Barron’s.
m Paul Palazzo, a Certified Options Advisor,
contributed to a July Wall Street Journal article “4
mistakes people make with stock options.”
n Andrew Altfest was featured in the Financial
Planning article “Real Estate Tightens Up.”
o Karen Altfest was featured in a recent
Investor’s Business Daily article, where
she discussed how Altfest Personal Wealth
Management® continues to meet the needs of our
clients. The article is titled “Keys to Success: A
Q&A with top financial advisor Karen Altfest.”
p Mike Prendergast was featured in a May Wall
Street Journal article, “Helping clients avoid social
security mistakes,” a profile piece that highlights
Mike’s passion for wealth management.
q Dawn Brown discussed “5 ways to save for
your child’s college education” in the April edition
of Black Enterprise magazine.
r Karen Altfest was featured in the May edition
of Investment News, in the article “Firm built
on trust responds to the needs of its clients,”
highlighting the Altfest approach to client service.
If you would like a copy of any of the appearances mentioned, contact Reza Rezvi at
(212) 406-0850 or at [email protected]. You can also stay up to date on our latest comments
and most recent media appearances by visiting www.altfest.com/more