Barrons Top 100 Advisors: Finding Opportunities in Alternative Investments – Barron’s

Posted: April 19, 2020 at 2:50 pm

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Ron Basu, left, and Christopher Toomey of Morgan Stanley Private Wealth Managements Team Global Photograph by David Vintiner

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For partners Ron Basu, Rachael Naylor, and Christopher Toomey at Morgan Stanleys Team Global, having skin in the game is critical. We invest alongside our clients, so we feel the pain and the gain, Basu says. Launching the practice in 2008 with a focus on the needs of the ultrawealthy, the trio has built a team of 16 who oversee $7.4 billion in assets.

Barrons: Has the pullback prompted changes in how youre investing?

Ron Basu: Our overall allocation hasnt changed a whole lot, but we have been buying the dips carefully. With regard to equities, weve been focused on quality global stocks. In fixed income, weve trimmed high-yield exposure over time [in favor of] Treasuries and short-term investment grade.

The Covid-19 pandemic has forced us all to work differently, including Barrons. To ensure the safety of the subjects and photographers, all portraits were directed and captured via video conferencing software.

Christopher Toomey: With the pullback, there are great opportunities in the fixed-income space in high-quality companies with great balance sheets. Theres going to be a tremendous opportunity in creditin particular distressed creditas we get through phase one, which is the health crisis, and move to stage two, the economic crisis.

You have up to 40% in alternative investments. Has that hurt or helped as markets sank?

Basu: We see opportunity for alpha generation in alternatives. A large percentage of our multimanager and multistrategy portfolios are doing exceptionally well.

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What kinds of risks do your clients face?

Toomey: Many wealthy individuals have large concentrated exposures. In some cases, its a private business with particular exposure to an industry or risk. In others, it is tax liabilitylow cost-basis stock, for example. One risk for foundations and individuals is the continued correlation of assets. It used to be that there were greater dispersions between stocks and bonds. With the proliferation of passive strategies and aggressive monetary stimulus, we are seeing these historical relationships break down, leading to more risk across portfolios.

One solution is to diversify into alternative strategies and add structures that have less liquidityI know, that seems counterintuitive. Certain investment opportunities require longer to exploit; more-liquid structures can cause managers to be forced sellers at exactly the wrong time.

What are the key characteristics of your clients and your team?

Basu: Weve doubled in people, assets, and complexity in the past five years. About 50% of our clients are U.S. families and institutions and 50% are non-U.S. resident clients. Our team also has a global perspective. Its like a mini United Nations.

Thank you both.

N = Not ranked; PWM = Private Wealth Management

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Barrons Top 100 Advisors: Finding Opportunities in Alternative Investments - Barron's

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April 19th, 2020 at 2:50 pm

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