LDI is a strategic approach to managing the relationship between an entity’s assets and its liabilities. The focal point is not maximizing returns per se, but ensuring that the entity can meet its future obligations under varying market conditions. By…

Investment Policy Statement (IPS) An IPS is a document that outlines the client’s unique investment objectives, risk tolerance, time horizon, and other constraints. It serves as a guiding framework for wealth managers to construct and manage investment portfolios tailored to…

Taxes and Their Impact on Investment Decisions Taxes significantly influence an investor’s net returns and wealth accumulation. Different jurisdictions employ various tax systems (e.g., progressive or flat) and apply different tax treatments to income components such as interest, dividends, and…

Nominal and Inflation-Adjusted Returns Human capital represents an individual’s future earning potential, while financial capital includes the current pool of investable assets. Both forms of capital drive crucial decisions regarding investment strategies and risk management. Understanding how inflation affects purchasing…

Large Institutional Investors Large institutional investors are entities that manage and invest capital on behalf of their clients. These clients could range from individual investors seeking long-term capital growth to organizations with financial obligations. Unlike individual investors who invest their…

Understanding Wealth Wealth represents the total value of an individual’s owned assets minus their liabilities, indicating overall financial health. Unlike income, which measures periodic earnings, wealth is a stock measure, reflecting accumulated holdings over time. Wealth does not include human…

Accumulation and Spending of Resources Managing wealth involves the strategic accumulation and spending of resources. Some families operate within a single country, using a single currency, while others have a more global footprint, with assets spread across various jurisdictions and…

Inflation and its Impact on Wealth Inflation, a significant long-term risk, can erode the purchasing power of investors and families. It’s a critical factor for wealth managers to consider as it can increase the nominal value of implicit liabilities or…

Strategies for Risk Management Wealth managers employ a range of strategies to manage the risks their clients may encounter. These strategies can encompass advising clients to mitigate, avoid, transfer, or retain risks. Despite the low probability of occurrence, the potential…

Risk Management Risk management is a vital process in finance, focusing on identifying potential threats to assets, including human capital, and devising strategies to mitigate these risks. The process comprises five key components: Monitor, Identify, Respond (Mitigate, Avoid, Transfer, Retain),…