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Endowment Model

by AOG Wealth Management

Sheila and I just returned from an enjoyable visit to Nashville, Tennessee.  We had a free afternoon and toured the Vanderbilt University campus, the Johnny Cash Museum, ate some great barbeque, and listened to dueling pianos at The Big Bang Bar & Grill.

We were in Nashville attending the Financial Insights 360 annual conference, and to complete my annual continuing education requirements for the Accredited Investment Fiduciary designation.

The conference agenda was dominated by concerns of my investment advisor peers discussing the likelihood of a 10%-20% technical correction in the stock market sometime in 2014 or 2015.  As I wrote in March, we are now in our sixth year of a “Bull Market,” and the average “bull market run” since World War II has been less than five years.  Many “technical” investors believe that this timing indicates that we are overdue for a correction.  When the stock market goes up this much over this length of time, technical traders get “twitchy” looking for a time to jump out of the stock market, take profits, and try to figure out when to jump back into the market.

There were similar conversations among portfolio managers regarding bond investments, and lots of discussions about how to limit the “down side” of bond losses that generally occur when interest rates start to go up.  We have not experienced a continually rising interest rate environment since 1982. (Who remembers 18% 30 year mortgages?)

I am grateful that we have worked so hard to develop a modification of the “Endowment Model” that personalizes it for individuals.  Our staff works very hard to provide the diversified elements of the portfolio, and our clients work earnestly to understand these investments.  The low-correlation and non-correlation of several of our asset classes to stocks and bonds provides confidence that we don’t face the binary solution set of just stocks and bonds that limit the choices my colleagues and their investors face.  We continue to try and anticipate areas of investment for growth, income and diversification.

By Frederick Baerenz
President & CEO

There are material differences between the terms under which endowments and individuals can invest in alternative investments. These differences include, but are not limited to commissions and fees, conflicts of interest, access to investment opportunities, size, investment time horizons, and the ability to tolerate illiquidity. There is no standard or exact definition of the endowment model. Portfolio design, specific investments and ultimately performance vary considerably among endowments and investors. AOG Wealth Management and Kalos do not claim that any investor will achieve the same result as any endowment, institution, or other investor. AOG Wealth Management’s Investment Adviser Representatives have a conflict of interest when they recommend securities where they earn a commission as Registered Representatives of Kalos Capital. We address this conflict by disclosing the fees and commissions related to the investments recommended to our clients. Also, Private Wealth Advisors do not earn both advisory fees through AOG Wealth Management and brokerage commissions through Kalos Capital on the same assets.
Category: Blog