PURCHASE OUR WHITE PAPERS - A QUARTERLY SERIES
A Modern Financial Advisor
Searching for Physician Specificity
At the Physician Knowledge Center for Financial Advisors™ we bring to life the insights and best practices within the healthcare financial advisory space — from select industry experts on a quarterly basis. If you are a financial planner or investment advisor wanting to impress physician clients and empower yourself to gain direction and stimulate your book-of-business; this repository of knowledge is sure to help you in a timely, cost effective and efficient manner.
Why? Because by writing and sharing leading edge experiences in new media electronic format — our experts are able to address contemporary areas of your physician focused financial advisory practice in an understandable and unbiased manner.
We also recognize that some colleagues may appreciate reading financial planning or investment information privately, and prior to matriculating in our Certified Medical Planner™ professional certification program.
There is a virtual information overload out there, little of which addresses the pragmatic concerns of those advising medical providers. None imparts the wisdom to become a better financial planner or investment advisor. All seem only to motivate the purchase of financial products. Yet, the depth and gravitas of our white papers and online Certified Medical Planner™ program expose you to pure education, only!
Therefore, as part of our continuing education contributions to the financial services industry, we highly recommend these two complimentary white papers on alternative investment strategies which are nationally popular with our physician audience. And, although not for everyone, both are considered “top-of-the-mind mentality” for many high-net-worth physicians.
WHITE PAPER #20
[32 pages; delivered by secure email in .pdf format]
ALERNATIVE INVESTMENT STRATEGIES FOR PHYSICIANS
[Hedge Funds]
Michael J. Burry; MD
[Hedge Fund Manager from Vanderbilt and Stanford University]
Hope R. Hetico; RN MHA CMP™
PAPER DESCRIPTION
The financial advisors and investment profession has come a long way since the door-to-door stock salesmen of the 1920s sold a willing public on worthless stock certificates. The stock market crash of 1929 and ensuing Great Depression of the 1930s forever changed the way investment operations are run. A bewildering array of laws and regulations sprung up, all geared to protecting the individual investor from fraud. These laws also set out specific guidelines on what types of investment can be marketed to the general public – and allowed for the creation of a set of investment products specifically not marketed to the general public.
These early-mid 20th century lawmakers specifically exempted from the definition of “general public,” for all practical purposes, those investors that meet certain minimum net worth guidelines. The lawmakers decided that wealth brings the sophistication required to evaluate, either independently or together with wise counsel, investment options that fall outside the mainstream. Not surprisingly, an investment industry catering to such wealthy individuals and qualifying institutions has sprung up.
Nevertheless, many investors — even those that meet the net worth guidelines — are surprised to learn that there exists a $500 billion alternative investment industry that is not generally marketed to the public. Such alternative investments have also been known as hedge funds or private investment funds. Unlike mutual funds, these alternative investments can be structured in a wide variety of ways. Because of the very same regulations discussed above, these funds cannot be advertised, but they are far from illegal or illicit.
In fact, physicians were among the most significant early investors in one of the last century’s most successful hedge funds. Mr. Warren Buffett, Chairman of Berkshire Hathaway, Inc. and a legendary investor got his start in 1957 running the Buffett Partnership, an alternative investment fund not open to the general public. One of Mr. Buffett’s first public appearances as a money manager was before a group of physicians in Omaha, Nebraska. Eleven decided to put some money with him. A few of these original investors followed him into Berkshire Hathaway, now among the most highly valued companies in the world.
The alternative investment, or hedge, funds of today are similar to the original Buffett Partnership in many ways. This whitepaper will introduce and explain this industry, as well as the pertinent historical, structural, legal, tax and operating issues which financial advisors should know for their potential and existing physician investors.
WHITE PAPER TABLE OF CONTENTS:
HISTORY OF HEDGE FUNDS
ELIGIBILITY
STRUCTURE
[A] Investment Vehicle
[i] Portfolio Manager
[B] Fund Size
[1] Costs
[2] Services
[3] Investments
[4] Minimums
[C] Fee Structures
[1] Asset Management Fee
[2] Performance/Incentive Compensation
[3] Hurdle Rate
[4] Highwater Mark
[5] Clawback Provision
[D] Expenses
[1] Organization Costs
[2] Ongoing Costs
[3] Reporting
[i] Liquidity
[ii] Industry Players
[a] Prime Broker
[b] Administrator
[c] Independent Representative
[d] Law firm
[e] Accountant
[4] Taxes
HEDGE FUND STRATEGIES
[A] Tools of the Trade
[1] Leverage
[2] Short Selling
[3] Arbitrage
[B] Categories
[1] Macro
[2] Equity
[3] Arbitrage
[4] Event-driven
[5] Industry / Sector Focus
[6] Commodity Pools
[7] Emerging Markets
[8] Options
[9] Funds of Funds
INVESTIGATING HEDGE FUNDS
[A] Third-Party Marketers
[B] Consultants
[C] Information Providers
[D] Word of Mouth
[F] Transparency
HOW TO INVEST
[A] Cover Letter
[B] Payment Instructions
[C] Fund Agreements
[D] Private Placement Memorandum
[E] Part II of Form ADV
AFTER THE INVESTMENT
[A] Size of Fund
[B] Strategy Obsolescence
[C] Lure of Leverage
[D] Style Drift
[E] Deception
[F] Manager Character
SPECIAL QUESTIONS AND ISSUES
THE END
WHITE PAPER #21
[12 pages; delivered by secure email in .pdf format]
MARKET NETURAL FUNDS FOR PHYSICIANS
[Demystified]
Dimitiri Sogoloff; MD, MBA
[Hedge Fund Manager from Columbia University]
Hope R. Hetico; RN MHA CMP™
PAPER DESCRIPTION
It's hard to believe that just 25 years ago, physician investors and their financial advisors had only two primary asset classes from which to choose for their allocation strategies: U.S. equities and U.S. bonds. Today, the marketplace offers a daunting array of investment choices. Rapid market globalization, technology advancements and investor sophistication have spawned a host of new asset classes, from the mundane to the mysterious. Even neophyte medical investors can now buy and sell international equities, emerging market debt, mortgage securities, commodities, derivatives, indexes and currencies, offering infinitely more opportunities to make, or lose, money.
Amidst this ongoing proliferation, a unique asset class has emerged, one that is complex, non-traditional and not easily understood like stocks or bonds. It does, however, offer one invaluable advantage; its returns are virtually uncorrelated with any other asset class. When this asset class is introduced into a traditional investment portfolio, a wonderful thing occurs; the risk-return profile of the overall portfolio improves dramatically. This asset class is known as a Market-Neutral strategy and is a perfect compliment to most any Hedge Fund strategy.
The reason few medical professionals have heard of market neutral strategies is that most of them are offered by private investment partnerships otherwise known as hedge funds. To the uninitiated, "hedge fund" means risky, volatile or speculative. With a market-neutral strategy however, just the opposite is true. Funds utilizing market-neutral strategies typically emphasize the disciplined use of investment and risk control processes.
As a result, this paper reveals how M-N funds have consistently generated returns that displays both low volatility and a low correlation with traditional equity or fixed income markets.
WHITE PAPER TABLE OF CONTENTS:
INTRODUCTION
DEFINITION OF MARKET-NEUTRAL
BRIEF DESCRIPTION OF STRATEGIES
[A] Convertible Arbitrage
[B] Fixed-Income Arbitrage
[C] Equity Market-Neutral Arbitrage
[D] Merger Arbitrage (a.k.a. Risk Arbitrage)
[E] Event-Driven Arbitrage
RISK AND REWARD CHARACTERISTICS
USE IN A LONG-TERM INVESTMENT PORTFOLIO
HOW TO INVEST
[A] Lockup Periods
[B] Managerial Risks
[C] Fees
[D] Transparency
[E] Taxation
THE END