Liquid Alternatives: A passing grade in their first real test

While many of the first established hedge funds date back to the 1970s, liquid alternatives are a fairly new asset class. Many of these strategies seek to provide hedge fund like returns in a mutual fund format. These funds have recently been put to the test during the recent market correction. A recent article from Investment News magazine entitled “Liquid Alts funds pass first real test with flying colors”  highlights the relative out-performance of this asset class versus traditional markets in the recent market sell off. Highlighted in their analysis is the AQR Managed Futures fund which is one of four managers we have allocated in to this space. The fund gained 4.15% on Monday (8/24/15) when the equity markets (as measured by the S&P 500 index) dropped 3.94%. Even the worst liquid alternative category, Equity Long-Short (as tracked by Morningstar Inc.), only dropped 1.86% on average during trading on Monday. 


 “Winning by losing less is a theme that the liquid alts space has long embraced, but over the past six years, most of the strategies haven’t been able to prove the point. Until now”   -Investment News


We have been investing in liquid alternatives for the past few years in our portfolios. We have seen many new products brought to the investment marketplace. We believe that a few of these products make for attractive components to our client portfolios, but there are also many products that we do not feel are appropriate in that format. Certain hedge fund strategies (managed futures and hedged equity) are liquid and transparent enough for a mutual fund investment, while other strategies (private equity, private real estate, and venture capital) are not. We continue to focus our efforts on managers that can manage volatility and provide relatively attractive returns that are less correlated to traditional markets. We believe that more and more products will be introduced to the marketplace and we are excited for the opportunities that this may provide for our client portfolios.

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Cyber Security and How to Protect Your Personal Finances

In today’s modern world, we are constantly experiencing a rapidly changing technological environment. While technology has definitely made our lives easier, it’s important for an individual to be acquainted with the ways in which technology can harm as well. Without the proper know-how to ensure your digital self is secured, you could be exposing yourself to a costly threat and not know it. As 2014 and 2015 have shown us, large-scale, widespread security breaches are taking place, and more personal data is being compromised. With more American’s losing privacy every day, here are just a few ways to keep you more secure when navigating the digital landscape.


1. Password Security: Keep sensitive files, such as those with account numbers and balances password protected. When sending sensitive files over email, make sure that all files are encrypted so in the event your email account is compromised, your statements will contain an added security feature. Keep separate passwords for every account you have, and keep a list in a safe and secure place that is completely away from your computer.

2. Double Check Before Opening Suspicious Files or Emails: If you receive an email from a financial professional who is requesting personal information, it’s best to delay answering the email right away if you don’t recognize them. Try to avoid opening any file that comes off as suspicious as well. All too often there are people that fall prey to phishing scams. A simple phone call to the financial professional you typically work with to verify the message could save you a substantial problem.

3. Keep an updated machine: Make sure you have the latest security software, update your web browser regularly, and ensure your operating systems are all up to date. Keeping them current is one of the best defenses against viruses, malware, and other online threats.

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Aligning Asset Allocation with Goals and Objectives

We all see the daily headlines: “Ten Stocks Poised for a Breakthrough this Summer” or “Here’s how to Profit by Playing these Oil Companies” or something to that affect. We’ve constantly been inundated by financial headlines, being forced to separate sound and suitable advice from the noise. From all this, the big question I hear from a lot of investors is “Where should I invest my money?” While there’s no “cookie-cutter” answer that fits the mold of each investor, there is one common solution: having a disciplined asset allocation strategy in place establishes a guideline and program for investors to follow.

So what should my asset allocation be? The answer to this question is quite simple – it should be the one that you are comfortable with and the one that you understand will help you reach your goals and objectives. Here’s an example: for a young professional who just became eligible to enroll in his company retirement plan, it may make sense to have a more aggressive, growth-oriented asset allocation. Conversely, retirees who are relying on their 401(k) and IRA assets to supplement their post-retirement income may want to consider a more moderate or balanced allocation.

The most significant determinant to asset allocation is ALIGNING your time horizon because time is an investor’s best friend. The longer your time horizon, the higher the risk/reward opportunities. It’s important to remember that your asset allocation must be flexible as you approach your investment goal.

Mark is a Portfolio Analyst at Heller Wealth Advisors. If you would like to learn more about how to align your asset allocation with your goals and objectives, please contact Mark at This email address is being protected from spambots. You need JavaScript enabled to view it.


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Rising Interest Rates - What are the Impacts for Fixed Income Investors

The United States appears to be at the tail end of a multi decade long period of falling interest rates that dates back to 1982.  These falling interest rates have helped fixed income investors by providing attractive returns with low volatility.  Hence, this has been a great vehicle for meeting investor income needs.

However, over the past several years interest rates have fallen to such low levels that these same investors have been forced into riskier areas of the financial markets to help meet their income needs.  Those who have remained in fixed income, and have resisted the urge to add risk for more income, might now find themselves in a situation where they begin to lose principal.  Investors who cannot wait for their bonds to mature (especially long term bond holders) might find themselves in a situation of having to sell their bonds at much lower prices.

We continue to feel that interest rates will rise over the next few years. We believe the best approach in this new environment may be a higher allocation to non-traditional fixed income that has a more flexible mandate.  That being said, looking forward we do think that returns in the fixed income space will be low and potentially even negative should we see interest rates rise faster than the market anticipates.

Scott Drown is a Portfolio Manager at Heller Wealth Advisors.  If you would like to discuss the fixed income markets, please contact Scott at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Strategies For Maximizing Your Lifetime Social Security Benefits

Anticipating Claiming Social Security: One Strategy Could Help Maximize Your Lifetime Benefits

If you’re age 62 or older, and you’re not already claiming Social Security benefits, chances are that you’ve contemplated filing at one time or another. Many people count on Social Security to supplement their income stream in their retirement. Filing early or late can adjust this income source for the remainder of your lifetime. This makes the strategy you choose that much more important if you’re at all worried about the possibility of outliving your assets.

People have various reasons for filing in different ways. Some individuals believe that filing early is best because they believe the system, in its current unsustainable condition, couldn’t possibly support future benefit payments. Others who file early could have a lack of liquidity and may need extra cash flow. Conversely, there are others who file after FRA to take advantage of earning delayed retirement credits (DRC). This is done by deferring your benefit past Full Retirement Age (FRA), which adds 8% annually from the government for leaving it in the system. The trade-off is that if you would need to supplement that income using assets from your portfolio. There are also people who file at FRA and receive their primary insurance amount (PIA), which is the monthly benefit that is due to you at FRA.

One strategy that has proven itself to many filers is to file and suspend. This is typically done with a married couple where one PIA is higher. The spouse with the larger PIA files for benefits at their FRA and then immediately suspends payment. This allows the other spouse to claim spousal benefits (up to 50%) on the larger PIA while earning DRC’s. This provides the couple a small cash flow early on, but also allows them both to secure the 8% annual increase when benefits are deferred past FRA. It’s important to note that is the spouse with the smaller PIA must be of FRA age to receive the full 50% benefit he or she would claim on their spouse. If the spousal benefits are started before FRA they will be reduced by 25/36 of one percent for every month before FRA up to 36 months. If they start more than 36 months before FRA, they are reduced 5/12 of one percent per month.

It’s important to note the Social Security Administration has submitted legislative proposals for the 2016 fiscal year, which amend the rules allowing the file and suspend strategy. Whether these proposed changes go in to effect or not, it is important to weigh your decision heavily. You are only allowed one withdrawal per lifetime if you decide you do not want to claim benefits if they’ve already started. In addition to only having one chance to re-file, the Social Security Administration requires that you pay back all benefits received once the withdrawal is affirmed.

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