When Interest Rates Rise: How High Net Worth Investors Can Prepare for the Inevitable

Jun 06, 2015 05:30 JST

Source: marcus evans Summits

Jeff Bates of Kings Point Capital Management, an investment management service provider at the marcus evans Private Wealth Management Summit Spring 2015, on adjusting strategies in a rising interest rate environment.

NEW YORK, N.Y., Jun 06, 2015 - (ACN Newswire) - "We are at the end of a 30-year secular decline in interest rates. While the current global interest rate environment remains benign, the long-term trend is going to rise. Hence, we are at an inflection point in interest rates. Managers will have to change their investment approach to adjust for this inevitable reversal," says Jeff Bates, Managing Partner, Kings Point Capital Management.

Kings Point Capital Management is an investment management service provider at the marcus evans Private Wealth Management Summit Spring 2015, in Palm Beach, Florida, June 7-9.

- What is your opinion on this? How are you approaching portfolio management in this new interest rate environment?

We are continuing to avoid utilizing ETFs for the most part. A rising interest rate environment is likely to pressure valuations over long periods of time. Thus individual equity and fixed income selection is likely to yield more control and better risk adjusted returns in a future of secular rising interest rates.

Importantly, overall equity returns are likely to be less robust than the last 20 years in this kind of environment. Moreover, fixed income returns are also likely to yield lower returns than in past interest rate cycles.

By focusing on individual equity and fixed income selection, the manager has more opportunity to generate alpha in a period where all stocks are not rising due to expanding market valuation.

- You mentioned risk adjusted returns. How should high net worth investors gauge portfolio risk?

Most high net worth investors are more focused on maintaining and improving their financial wealth in a prudent manner. In a rising interest rate environment, market volatility is likely to accelerate and market corrections could also be more pronounced than in the recent past. By focusing on a well-diversified but limited number of investments, they can achieve very good returns with lower risk than the market overall. That is the kind of portfolio that most high net worth investors should really seek.

We as financial professionals also need to educate our client base on risk adjusted returns that exceed inflation and achieve their long-term return goals. Additionally, more and more clients are requesting a total picture approach to understand all their financial investable assets and how risky those assets are in general.

- Why should they capture investment holdings from all their advisory accounts? How?

In the last few years many of our clients asked for a detailed analysis of all their investments. We created an aggregation product called WealthScope(TM). This aggregates all their investments with us and with outside managers. WealthScope gives them a risk adjusted picture of their total exposure by asset class, manager and benchmark. We can tell how much risk is being taken to achieve these reported results down to individual equity or fixed income by manager. This helps them avoid over diversification of the portfolio and gives them a clearer picture of how much risk is being taken to achieve these results. It has become a very powerful tool for clients in manager selection.

About the Private Wealth Management Summit Spring 2015

The 16th Private Wealth Management Summit is the premium forum bringing leaders from America's leading single and multi-family offices and service providers together. Taking place at the Eau Palm Beach Resort & Spa, Palm Beach, Florida, June 7-9, 2015, the Summit includes presentations on generational planning, trends in family office investing, conducting due diligence on alternative investments, strengthening client relationships and what to expect in the years ahead.

For more information please send an email to press@marcusevanscy.com or visit the event website at www.privatewealthsummit.com/JeffBatesInterview

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Please note that the Summit is a closed business event and the number of participants strictly limited.

About Kings Point Capital Management

Kings Point Capital Management (KPCM) was founded in 2005 by two former Goldman Sachs professionals. We maintain offices in Great Neck, NY and Brentwood, TN. Our principals have managed portfolios for over 25 years. Our mission is to provide financial advisory services to a select group of high net worth families, endowments and foundations. We approach each client separately and from a preservation of capital perspective. Our software tools are designed to identify and understand the various nuances and risks associated with each client allocation. As such, the approach develops a unique, customized and dynamic solution for each engagement. The results culminate in a specifically designed reporting package trademarked as WealthScope(TM). www.kingspointcap.com.

Contact:

Sarin Kouyoumdjian-Gurunlian
Press Manager, marcus evans, Summits Division
Tel: +357 22 849 313
Email: press@marcusevanscy.com

Source: marcus evans Summits
Sectors: Daily Finance, Daily News

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