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How to get a portfolio manager's attention and other email tips from an investment marketing consultant

It's not easy getting portfolio managers to open your emails. That's why investment marketing consultant Jen Dunning sometimes writes her email subject lines completely in capital letters.

"INVESTMENT COMMENTARY - PLEASE APPROVE BY JUNE 30" grabs the reader's attention where a meeker "Please approve by June 30" would not. Note that she puts her key action verb, "approve," and its object, "investment commentary," in the subject line. That also boosts her emails' effectiveness.

But limit your use of all-capitals subject lines to rare instances of pressing need with people who work for your own organization. You risk irritating your recipient if you use all-caps too often. It flouts the rules of email etiquette and is considered "shouting."

Some additional email tips from Dunning:

• Save your pleasantries for the end of your email because busy readers want to get to the point right away
• Before you attach an Excel file, name it and insert page breaks and headers and footers, including page numbers and total number of pages
  

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Morningstar Market Barometer, 2003-2007

Want to show your clients how equity styles and sectors perform differently over time?

The newly released 2-page Market Barometer from Morningstar can help.


_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Does your auto mechanic communicate better than you?

"Nearly three-fourths of the 1,203 adults polled said their auto mechanic uses clearer English than their financial professionals," according to "Financial Jargon: You Just Don't Understand" by Cathie Gandel in AARP Bulletin Today.

Are you one of those confusing financial pros? And are your clients suffering as a result?

Learn more about the results of a survey by AARP Financial about consumer understanding of financial jargon.

“The Top Four Investment Strategy Challenges for Financial Advisors”

One year ago it seemed as if the good times would never end. Today, many investors go to bed wondering what bad news will greet them in the morning. In this volatile environment, Advisor Perspectives asked financial advisors to identify their greatest investment strategy challenges.

Continue reading my article, “The Top Four Investment Strategy Challenges for Financial Advisors,” in Advisor Perspectives.

Morningstar praises Putnam's "plain English" and provides tips so you can write in "plain English," too

Writing in "plain English" is easier said than done. So I was intrigued when Morningstar singled out Putnam for "plain English" prospectuses in "Letter to SEC: Short Fund Prospectus Helps Shareholders."

For example, the author liked this description of Putnam Voyager's strategy: "We invest mainly in common stocks of U.S. companies, with a focus on growth stocks. Growth stocks are issued by companies that we believe are fast-growing and whose earnings we believe are likely to increase over time."

Here are some "plain English" writing tips I extracted from the Morningstar article:

1. Get specific about strategy. Instead of describing your investment objective using terms like "capital appreciation" that don't mean a lot to ordinary folk, get specific about "the types of securities the fund usually owns and the criteria a fund manager uses when buying and selling securities."
2. Use graphs.
   
3. Put returns in context by comparing them with the fund's benchmark. Don't make your readers struggle to understand returns without any basis for comparison.
   

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Canadian economist gloomy, but "sunshine and lollipops" compared to Marc Faber

"My presentation is sunshine and lollipops compared to [Marc Faber's]," said Patricia Croft, chief economist, Philips Hagar & North Investment Management, a Canadian firm. Both spoke at the Refining Wealth Management Conference in Edmonton, Alberta, on April 24. (Read my comments on Faber's presentation). Croft's focus was "Outlook 2008/09--Life in the Aftermath of the Great Global Credit Crisis."

One of Croft's key points: the Canadian dollar is overvalued, so the U.S. dollar will head up.

Over the next nine months to one year, the Canadian dollar is likely to trade vs. the U.S. dollar in the range of 95 cents to $1.10, said Croft. But, "longer-term, the Canadian dollar at parity is significantly overvalued." Based on the OECD's purchasing power statistics, 85 cents to the dollar is more realistic.

Croft expects the U.S. dollar to end 2008 stronger than it is today. Why? It's like the accounting concept of FIFO, "first-in, first-out." The U.S., which was the first to enter recession, will be the first out, she said. She also reckons that an Obama presidency could boost the U.S.

Other observations:

• The Canadian housing market isn't likely to follow the U.S. example because Canada's mortgage market is more conservative (less than 5% of mortgages are subprime) and Canada is one of only two undervalued real estate markets (the other is Austria).
• Food price inflation has staying power
• We're near a major inflection pont for inflation and real interest rates will also rise
• Good buying opportunities for Canadian investors include Canadian financial debt, Canadian bank stocks, and U.S. stocks

You can view a webcast of Croft's outlook for the second quarter of 2008.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Buy farmland, not NYC real estate, says Marc Faber

Buy farm land, said Marc Faber on April 24 in his presentation to the Refining Wealth Management Conference sponsored by the CFA Society of Edmonton. For one thing, as investment managers, the audience members should diversify out of financial assets. Plus, if war breaks out over scarce commodities, where’s a more likely target—Wall Street or a far away farm in Canada where you can grow your own food?

The farm land suggestion was just one tiny part of a presentation on "Will the first synchronised global economic boom in the 200-year old history of capitalism also lead to a synchronised bust?" by Faber, the publisher of The Gloom, Boom & Doom Report. Faber said "a colossal bust" is likely.

Faber was quite critical of Ben Bernanke and the Fed. "Expansionary monetary policies, which caused the current credit crisis in the first place, are the wrong medicine to solve the current problems.... But what options does the Fed have with debt to GDP at 350%?"

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

SEC's Director of Trading and Market Regulation to speak March 28 at Babson College conference

The first Babson Investment Management Conference on March 28 offers some interesting speakers, including Erik Sirri, the SEC's Director of Trading and Market Regulation.

The conference will take place on the campus of Babson College in Wellesley, Mass.

The cost for the general public is only $25.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Asset allocation in a low return world

The rules of asset allocation have changed. Two of the new imperatives:

• Using tactical asset allocation (TAA)
• Investing in real assets

These are among the best strategies for individual investors in an environment in which U.S. stocks are expected to average annual returns of 6%-7%. This is what I took away from "Asset Allocation in A Low Return World," a March 13 presentation to the Boston Security Analysts Society, by Adrian Cronje, vice president and director of asset allocation, Wilmington Trust.

Tactical asset allocation doesn't deserve its bad rap

Everyone says, "Don't try to time markets." But TAA is not market timing, said Cronje. "It is not about forecasting turning points." Instead, it is a form of rebalancing that can boost your returns.

You might think of rebalancing as buying and selling assets to return them to predetermined percentages. That's not what Cronje meant. He spoke instead about adjusting allocations to take advantage of changes in risk premiums.

"Dispersion among sub-asset class returns reflects risk premiums that are not stable, but cyclical," said Cronje. He talked about sub-asset classes because he looks at distinctions finer than large-cap vs. small-cap or growth vs. value. He'd prefer to invest in narrowly defined subsets, such as value as defined only in terms of book value or growth in terms of earnings.

Sub-asset class outperformance can be significant—what Cronje calls "large amplitude"—and last one to four years. That's often enough to justify the transaction and tax costs of TAA.

Cronje believes it's possible to identify when there has been a strategic shift in sub-asset class returns, so you can change your allocation once the new cycle is already under way. That's a lot better than suffering for getting in too early.

TAA can deliver returns that made Cronje say, "Beta is not always boring, cheap and alpha's unloved cousin."

Investing in real assets is essential for individual investors

"Today, traditional stocks and bonds just aren't good enough any more," said Cronje. Individuals should diversify into real assets and alternative assets. These are asset classes that can deliver real sustainable earnings power.

In one sense, real assets can be defined as physical or tangible assets. But more importantly, they're assets that offer a hedge against inflation. For example, inflation-linked bonds, real estate securities, and commodities. Since the debut of ETFs, these asset classes have become much more accessible to individuals.

A typical Wilmington Trust client might have 10%-15% in real assets. But they're a lot wealthier than your typical individual investor. Cronje didn't describe the profile of the individual investor who should consider these techniques. Presumably there's a minimum level of investable assets required.

Alternative assets—hedge funds, private equity, and private real estate—are also expected to outperform over the long term. They're not as accessible to individuals. In fact, even institutions must compete to invest with top performers. Although Cronje didn't discuss them, there are new investment vehicles—such as mutual funds that pursue long-short strategies—that alternative investments more accessible.

Cronje based these asset class recommendations on a long-term, inflation-adjusted forecast for returns. He called forecasts for periods of 10 years or more "highly reliable." Of course, he's not looking for accuracy down to decimal points. What's important is which asset classes will outstrip others, and in what order.

Follow Cronje's advice, and perhaps your portfolios will be better positioned for today's uncertain environment.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Financial Analysts Journal article favoring annuities

The Financial Analysts Journal writing favorably about annuities? That grabbed my attention.

In "The Longevity Annuity: An Annuity for Everyone?" in the Jan./Feb. issue of the Financial Analysts Journal, Jason S. Scott suggests that a relatively new product called a longevity annuity can maximize retirement spending for some retirees. This is especially true for retirees who:

• Are in good health
• Aren't very concerned about leaving a bequest
• Have enough wealth to afford an annuity, but not so much that they needn't worry about outliving their assets

Here's how Scott, managing director of the Retiree Research Center at Financial Engines, describes this product.

"Longevity annuities are essentially immediate annuity contracts without the initial payouts. That is, a longevity annuity involves an up-front premium with payouts that begin in the future. For example, an age-85 longevity annuity can be purchased at age 65 with payouts commencing only when and if the purchaser reaches age 85.

Longevity annuities are better than immediate annuities because they "maximize the insurance benefit per premium dollar." Scott compares the cost of securing that future spending with bonds vs. with a longevity annuity. He finds that "the future spending that costs $1.94 to secure in the bond market costs only $1.00 in the annuity market. Thus, every annuity dollar allocated to finance spending at age 85 frees up 94 cents for additional spending."

What do you think? Is this something your clients should consider?


_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

"Stock Price Correlated to Likeability of Super Bowl Ads"

"When TV viewers like a company's Super Bowl commercial, the company's stock price goes up, according to a study by researchers in the University at Buffalo School of Management and Cornell University."

It's not too late to watch the Super Bowl ads to assess them for likeability.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

“Better writing without parentheses” by Harriett Magee

Here’s a guest article by Harriett Magee, a writer-editor who specializes in alternative investments.

Parentheses (like all punctuation) can hurt (and help) most writers (maybe even all) in getting their point across to readers. Readers may find such marks annoying, like in the previous sentence, because they interrupt the flow and weaken the message with irrelevancies. And while most readers don’t count words in sentences, parentheses often result in long sentences, which tire and confuse readers. (The ideal sentence length is 15–20 words.) To get your message across, use parentheses sparingly.

For writers, parentheses can seem like a lifesaver because they offer a home to data and show you’ve done your homework. They’re ubiquitous in research reports. Writers may also use them as a way to repeat information to drive the point home. For example, “The $750 million Big Ideas Venture Fund II was allocated roughly half to early- and to late-stage life science investments (49% and 51%, respectively). Fund III, however, had only about a tenth of capital ($75 million) invested in one early-stage investment.” But readers will get the point faster if you leave out numbers.

When writing about investments, often the urge to insert alternative metrics can be satisfied by putting the data in a graph. For example, give the prospective investors in the $2 billion Big Ideas Fund IV a bar graph showing the shift in allocations to young vs. more-established companies. A bar graph would accomplish two things: provide variety by breaking up the text with a picture, resulting in more white space to give the eyes a rest, and provide alternative metrics for people, especially those who want more detail.

Hedge Funds in High Net Worth Portfolios

There’s more than one way to invest responsibly in hedge funds.

That’s a lesson from RINET Company, LLC and The Colony Group, LLC, two Boston-based wealth management firms. RINET typically puts its clients in hedge funds of funds. Although it sometimes relies on its own due diligence, The Colony Group prefers direct investment in hedge funds in which its wholly owned subsidiary, Colony Funds, LLC, serves as general partner. Yet RINET’s and Colony’s approaches to due diligence overlap. Both delve deep into the quantitative and qualitative details. Without extensive due diligence, clients could lose everything to fraud, deviation from strategy, or reckless investing.

Read more about these two firms' strategies for hedge fund investing in my article published in Advisor Perspectives.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

For better investment commentary, read it out loud

Your investment commentary will pack more pop with a conversational tone. Individual investors will find it more intelligible and intriguing.

How do you know if your writing sounds conversational? Read it out loud.

When you read out loud, you'll also:

• Discover typos that you might have overlooked
• Become more aware of your writing's rhythm--The right rhythm can help keep your reader on track
  

_____________________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Know your audience before you write investment commentary

Think about your audience before you begin writing your investment commentary.

Identifying your audience will help you choose the topics, tone, and language that will glue readers to your commentary.


It's all about your reader

What's the typical reader's favorite word?

Some portfolio managers suggest "outperformed" or "beat the benchmark" when I ask this question in my investment commentary writing programs. These terms probably run a close second behind the winner.

The winner is "you." Using the word "you" will help to attract readers' attention. They also like content that is tailored to their needs and style of communication.

Think about your clients, prospects, and referral sources.

Are they:

• Emerging affluent, high net worth, institutions or consultants?


• Sophisticated investors, newbies or somewhere in between?


• New college grads, young families, entrepreneurs or creators of wealth, planning for (or living in) retirement?

When you meet in person with your clients, you quickly discover their different interests and levels of understanding. You should reflect these characteristics in your writing as well as in your face-to-face meetings.

Emphasize impact on client portfolios

Your clients will zoom in on "What does this mean to me?" Especially, "How does it affect my portfolio?"

If you manage all client accounts identically, you can easily discuss the impact of market trends--and even specific stocks--on their portfolios. Be sure to make that connection explicit in your commentary.

It's not so easy to tie your commentary to client portfolios when accounts vary due to differing investment styles, managing for tax efficiency, timing of cash inflows, and other factors. But you can still do it.

When you've got account dispersion, you can still personalize your commentary by talking about:

1. Asset classes (and maybe even sectors) instead of specific securities


2. Where you're looking for new opportunities or where you foresee weakness


3. Address questions your clients ask


4. How account performance may vary because you customize your portfolio management to client needs

Choose topics that interest your readers

When I first wrote investment commentary at Fleet Investment Advisors (now Columbia Management Group), I focused on recapping the past quarter's events, just as my predecessors had. Nobody complained. At least, not in the beginning.

However, as I got to know the portfolio managers in the field, they warmed up enough to tell me the truth. "We can read this in The Wall Street Journal," they said. "What can else can you say?"

I discussed one response earlier: Talk about what you see coming in the future. Be sure to relate it to how you'll adjust your client portfolios.

Another route is to answer a popular question, such as "How can I generate more income in this low-return environment?"

Or, you can take a stance on a controversial topic. Some good sources for topics:

• The Wall Street Journal and other publications read by your clients
• CFA Magazine, Financial Analysts Journal, and other specialist publications
• Brokerage research

One benefit of using the abovementioned sources is that they'll provide documentation that you can use to satisfy the compliance professional who reviews your commentary.

Write for your clients' level of understanding

You may be able to toss around terms like duration, contango, and reversion to the mean without confusing your investment colleagues. That's not true for the typical individual investor. So, simplify your vocabulary for them.

I like Warren Buffett's advice. He suggests, "Write with a specific person in mind. When writing Berkshire Hathaway's annual report, I pretend that I'm talking to my sisters.... They will understand plain English, but jargon may puzzle them." Buffett made this comment in A Plain English Handbook: How to create clear SEC disclosure documents, an excellent resource for investment commentary writers.

Follow these tips and your investment commentary will keep your readers' attention.

_____________________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

More asset management M&A ahead?

"... one result of the credit dustup could be a more pronounced shift of capital toward brand-name firms and managers, along with an acceleration of M&A activity in the sector," says the third quarter 2007 newsletter from Berkshire Capital (p. 2).

For example, Berkshire cites Citadel Investment Group's acquisition of distressed assets from Sowood Capital.

CFA Digest: "Diversification Benefits and Persistence of US-Based Global Bond Funds"

Adding a global bond fund can improve your portfolio's risk-return characteristics.

According to a CFA Digest abstract of "Diversification Benefits and Persistence of US-Based Global Bond Funds," "Adding global bond funds to a portfolio is found to provide significant incremental benefits to equity index funds and domestic bond funds and to reduce the impact of volatile markets on a portfolio."

The full article by Sirapat Polwitoon and Oranee Tawatnuntachai, CFA appeared in Journal of Banking & Finance, Vol. 30, No. 10: (October 2006)2767-2786.

Strategic relationships can boost revenues--and client satisfaction--for estate planning attorneys, says DKE Inc.

Estate planning attorneys can boost their revenues--and client satisfaction--through strategic relationships with investment advisors, says DKE Inc. in their white paper, excerpted below. You can access the entire white paper by clicking on this link and then clicking again on "Attorney Strategic Relationships." DKE Inc. is one of my clients.

Estate planning attorneys face downward pressure on their income due to increased competition from attorneys and non-attorneys. Changes in tax laws also threaten the market for their services.

Estate planning attorneys can overcome these barriers to growth by forming strategic relationships with professionals in related, noncompetitive areas. These relationships should not focus on revenue enhancement. Instead, their goal should be improving client satisfaction within the context of the estate planning attorney as the client’s most trusted advisor. Revenues will follow.

In this paper, we provide a blueprint for estate planning attorneys to establish solid, effective and enduring relationships with such professionals and their clients.

"How to Write Investment Commentary Your Clients Will Read," Sept. 24 BSAS program

You invest a lot of effort in writing your quarterly client letter or commentary. Wouldn't it be nice if your clients actually read it? Some simple, quick tips can spice up your commentary without landing you in trouble with your Compliance Department. "How to Write Investment Commentary Your Clients Will Read," an interactive program, will teach you to make your text reader-friendly without stripping it of meaty content.

Register for this program led by Susan Weiner, CFA on the Boston Security Analysts Society website. If you can't attend the September 24 program, contact Susan to present customized training at your company.