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HomeInvestmentKnow Your Prospect (KYP): What’s in Their Portfolio and Why?

Know Your Prospect (KYP): What’s in Their Portfolio and Why?


I interviewed 50 wonderful individuals — 25 ladies and 25 males — from completely different professions and industries for my 14th annual analysis paper launched on Worldwide Ladies’s Day, 8 March 2024. To have a good time the event, I needed to share some examples of how ladies around the globe are investing. Beneath are 10 responses to the query: What’s in your funding portfolio?

Whereas I used to be conducting my interviews, I spotted {that a} potential consumer’s current funding portfolio is a possible diagnostic device for funding advisers. We regularly have a look at their portfolio as one thing that must be “fastened,” however what’s in it might reveal helpful details about what’s essential to the prospect and the way they could have labored with their earlier adviser. This strikes me as similar to how medical clinicians use diagnostic assessments to ascertain whether or not a affected person has a selected situation. 

When engaged on a prospect’s funding coverage assertion (IPS), we usually take into consideration whether or not they need to exclude oil or tobacco shares, however possibly they produce other distinctive preferences which have led them to spend money on a sure approach. Utilizing their current portfolio to diagnose their investing habits and persona simply would possibly result in the next conversion fee.

Valentina Díaz Estévez, Finance Skilled, Dublin

“I’ve lived in a number of completely different cities: Río Gallegos within the south of Argentina throughout my childhood, Paraná, Buenos Aires, and now Dublin. I like new experiences: Studying tips on how to begin once more makes me a stronger particular person. I attempt to be taught from each step in my life. At the moment, I’m in Eire, the place I’ve launched into a grasp’s of science program in fintech on the Nationwide School of Eire (NCI) in Dublin. I’m honored to have acquired the Authorities of Eire Worldwide Schooling Scholarship (GOI-IES) for the 2023 to 2024 educational yr, a prestigious award granted to solely 60 recipients out of over 5,000 candidates.

“When it comes to my funding portfolio, it’s diversified with 70% in US {dollars} and 30% in Argentine pesos once I was residing in my nation. Half of my greenback holdings are invested in Latin American funds, whereas the opposite half is allotted to S&P exchange-traded funds (ETFs) and extra conservative shares, akin to Proctor & Gamble, McDonald’s, Walmart, and Coca Cola. My pesos are invested in funds which are linked to inflation, and I maintain about 10% liquid in cash market funds to pay for my day-to-day bills. Moreover, I at all times preserve a small allocation to gold as a hedge for high quality during times of volatility.”

Umulinga Karangwa, CFA, Founder, Fairness Funding Adviser, Africa Nziza Funding, Cape City

“I began my profession as a tax advisor, however I discovered the hours to be grueling so determined to shift to finance. Within the final 20 years, I’ve labored and lived in Belgium, the UK, and Africa. I now do enterprise in each Cape City, South Africa, and Mauritius, and for comfort, I personal an house in every metropolis. My agency Africa Nziza gives funding advisory providers for institutional buyers and funding appraisal providers for personal fairness buyers, and we conduct impartial funding analysis on funding alternatives within the area.

“My private funding portfolio consists of 30% actual property and 70% equities and ETFs. Residing in Africa, it’s important to purchase actual property to hedge towards inflation (at the moment 7%), and this concern is compounded by the depreciation of the foreign money. Mauritius and South Africa are usually not very investable inventory markets. My pension fund continues to be housed in Europe, and it’s invested principally in ETFs. In any other case, I’ve held onto the S&P 500 for 20 years now, and it has appreciated a lot greater than the rest. I didn’t imply to have a lot of my cash within the US market; it simply occurred. Ten years in the past, I made a decision to not rebalance — why argue with success?”

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Sabrina Amélia de Lima, Portfolio Specialist, Itaú Unibanco, Belo Horizonte, Brazil

“My funding portfolio is concentrated on international diversification. I imagine that is the cornerstone of danger administration, portfolio development, and attaining long-term constant secure returns. Right here is the breakdown of my portfolio: 

  • “20% in inflation-linked property, akin to nationwide treasury bonds incomes about IPCA [the official Brazilian inflation index] plus 6% in debentures of excellent corporations 
  • “20% in worldwide ETFs, akin to IVV, QQQ, and VNQ, and equities, together with Coca-Cola, Meta, Alphabet, PayPal, and Ferguson PLC
  • “5% in various property, akin to cryptocurrency funds through ETFs
  • “5% in mature corporations within the Brazilian inventory market, akin to Itaú, Vale, and Weg
  • “50% in fixed-income funds and multimarket funds managed by Itaú Asset, Kinea, Kapitalo, Vinland, and others 

“My profile is extra aggressive in that I settle for taking danger in an effort to search better returns. My most important issues are inflation safety and geographical diversification.”

Sloane Ortel, Founder and Chief Funding Officer, Make investments Vegan, Provo, UT 

“I fashioned a long-term view of how I needed to form this trade, and I began Make investments Vegan in 2021.

“We at the moment have 19 holdings within the Make investments Vegan portfolio together with:

  • “Farmer Mac: This mission-driven lender was chartered by Congress to create a secondary marketplace for agricultural credit score and scale back the price of borrowing for American farmers; 99% of its enterprise is recurring charges and web efficient unfold.
  • “Welltower: a REIT that is without doubt one of the largest buyers in senior assisted residing. Employees turnover is damaging in that enterprise, and I like that they’re centered on meaningfully greater employees retention, which additionally drives meaningfully greater outcomes.
  • “Duolingo: an app that helps anybody be taught languages, music, and math without cost. These common abilities are among the many most significant drivers of financial mobility and private fulfilment for people.

“To me, veganism is a coherent moral system that focuses on avoiding hurt to residing issues and seeks a regenerative relationship with the world. It’s not a weight-reduction plan. It’s 1,000 tiny steps that contact on the whole lot out of your toothpaste to selecting trains over planes. I named the agency Make investments Vegan as a result of, to me, that form of holistic pondering is a precondition for a long-term technique that deserves a consumer’s belief.”

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Ann-Christina Lykke Motzfeldt, Artwork Director, A Honest Company, and Co-Founder, Moneypenny and Extra, Rønde, Denmark 

“Seven years in the past, Linnéa Schmidt and I co-founded Moneypenny and Extra, which is Denmark’s and Norway’s largest on-line funding neighborhood for ladies. We facilitate discussions, host lectures and occasions, and publish books on funding. I used to be a full-time artwork director for 16 years, and I nonetheless do a little bit of artwork course to earn extra cash, however most of my time as of late is spent engaged on Moneypenny and Extra. I work actually onerous — many, many hours a day. This has been such a wild journey. I like to encourage and assist ladies strengthen their relationship with their funds.

“Being self-employed I don’t have a pension, so I created my very own retirement funding portfolio. I’ve been buying and selling since 2008, and I at the moment maintain 18 particular person shares. I want shares to ETFs as a result of I like to purchase corporations I do know which have services I exploit in my day by day life. I ought to in all probability be extra globally diversified with my firm choice: 11 are Danish, 5 are American, one is Swedish, and one is German. However, my sector choice is extraordinarily properly diversified: banks, prescribed drugs, tankers, tech, electrical vehicles, journey, software program, and nanosatellites. Total, my portfolio is doing very properly — I’ve loved a mean annual return of 10.88%. 

“Outdoors of my core portfolio I personal 4 completely different various asset courses: basic vehicles — I get pleasure from driving my Porsche 911; actual property — an house that I lease out; start-ups — two which are ‘doing good’ for the world, one combating for variety in Denmark and the opposite serving to Ugandan ladies begin their very own small companies. And, after all, my funding in Moneypenny and Extra.”

Molly Howlett, DO, Inner Medication Specialist, Kootenai Well being, Spokane, WA 

“When it comes to how I make monetary choices or select a monetary adviser, I’m a hyper-logical particular person, however my mother was very intuitive. I believe there’s unbelievable worth to following instinct in making remaining choices, after correctly analyzing and narrowing decisions. Instinct is one thing I’ve to observe, however following that ‘intestine feeling’ has hardly ever been mistaken.

“What’s in my funding portfolio?

  • “60% fairness mutual funds
  • “10% gold and silver
  • “25% actual property
  • “5% crypto

“I outsource my portfolio to a beautiful monetary man who a few of my bosses at work really helpful to me. He’s a Mormon, has an enormous coronary heart, and is dedicated to service. Admittedly, I don’t pay a lot consideration to my investments. Since I can’t see them or contact them, I at all times have this sense that all of it would possibly by some means disappear. However I belief my adviser. He’s a beekeeper, and we spend most of our time speaking about bees! He makes me honey, and I’ll make him muffins.”

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Therese Nyren, Founder, Lucy International Fund, Stockholm 

“At some point, a feminine pal stated to me, ‘You need to begin a fund.’ At first, I assumed, ‘No I can’t.’ However then I stated to myself, ‘Nicely, why not?’ In my 10 years as a non-public banker, I met so many entrepreneurs, and I assumed if they will do it, then I can do it! I put all my cash and all my ardour into Lucy International Fund, so that is my whole funding portfolio. Lucy International Fund is a worldwide fairness fund with a most important deal with corporations in life-style, well being, and wonder in addition to corporations with well-known and enticing manufacturers. The title Lucy was impressed by the character of the identical title on the Nineteen Eighties TV present Dallas

“My prime 10 holdings are Apple, Movado Group, Musti Group Oyj, Nike, Coursera, Microsoft, Hugo Boss AG, Burberry Group PLC, Matas, and Kering SA.

“I’m very proud that we at the moment are on 9 completely different platforms in Sweden. So many individuals instructed me to not begin a fund, however when individuals say no, it triggers me. I’m actually cussed, and I need to present them. I don’t pay attention; I simply do it — I remedy the issue. Look the place we at the moment are! Lucy International Fund was up 17.15% in 2023.”

Elisa Chiu, Founder and CEO, Anchor Taiwan, Taipei Metropolis, Taiwan 

“I’m somebody who can creatively join the dots and naturally deliver individuals with completely different disciplines collectively — tech to artwork, semiconductors to vehicles. I began Anchor Taiwan in 2017 as a platform for world-class entrepreneurs, buyers, and professionals to reach Asia via Taiwan.

“Though I spent a great portion of my profession as knowledgeable investor, a buy-side hedge fund dealer, my funding portfolio is much from typical, and it goes towards all of the ideas I realized from finance textbooks. My investing strategy displays my selection associated to fulfilling sure psychological wants in an effort to maximize my entrepreneurial endeavors. I’ve two excessive reverse funding buckets: the primary is 100% money, and the second is a portfolio of early stage start-ups and VC funds. With the intention to take loopy dangers, I would like that money buffer to permit myself to pursue my calling and go all in to construct one thing I really need.”

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Shaima Bin Hussain, Entrepreneur, Hawalli Governorate, Kuwait 

“I’ve greater than twenty years of expertise in banking, entrepreneurship, enterprise improvement, and monetary providers. I play an lively function in empowering people, particularly ladies, upscale their place within the company world and social setting. I’ve a supportive internet of native and worldwide public figures who assist me advocate for constructive socioeconomic modifications centered on ladies of various generations.

“I used to have a extremely diversified funding portfolio throughout my banking profession; nonetheless, now as an entrepreneur, I don’t have the time to make this a precedence. I’m caught with an actual property fund centered on pupil housing within the UK that I’m unable to exit — I’m ready for the fund to be liquidated. At first, this was a terrific funding, nevertheless it hasn’t paid out something for the previous six years. In any other case, I’ve a concentrated guess in a single inventory ااستهلاكية, a Kuwaiti providers firm that produces client gadgets akin to plastics and luggage. They not too long ago restructured as a holding firm and purchased leisure providers for youths. I’m actively on the lookout for extra actual property funds that generate month-to-month revenue.”

Lisa Melchior, Founder and Managing Accomplice, VERTU Capital, Toronto 

“I’m not the one who talks essentially the most in most rooms, and I’ve been instructed that being a great listener is a genuinely distinctive skillset in my trade. On reflection, I really feel grateful for having grown up in a loud Italian household: My dad was a giant talker. I realized tips on how to be strategic and say issues that will pierce via the noise and get everybody’s consideration. This served me properly beginning out within the enterprise as a junior — I realized to ‘look ahead to the pause’ and communicate strategically. My abilities realized on the eating room desk have translated properly into enterprise!

“What’s in my funding portfolio? My largest holding is my curiosity in VERTU Capital, so I’m very lengthy personal fairness. As a household, we’ve got actual property holdings — my husband is an actual property builder and developer, so we’ve got plenty of publicity there. When it comes to my inventory portfolio, it in all probability isn’t shocking that as a non-public fairness investor, I’d be very comfy with danger: Being invested 80% in equities has served me properly during the last 25 years. Within the final 5 years, I’ve added some uncorrelated investments, akin to hedge funds and personal credit score. Except for my fairness guide that’s managed on a discretionary foundation, I’ve a private fairness portfolio of 10 to 12 very high-quality companies that I’m completely happy to carry eternally, akin to Berkshire Hathaway, Microsoft, Apple, Pfizer, and Nike. I additionally love to gather artwork, however that is extra of a ardour than an funding. I wish to assist residing up to date artists — primarily Canadian.”

Conclusion

This kind of context is a good way to start the KYP course of. After that, there’s Subsequent Stage KYP, or Know Your Prospect Higher! After you perceive what’s of their portfolio, focus in and talk about how they got here up with their current funding technique, why they constructed their portfolio the best way they did, and ask about their distinctive preferences and what impressed them.

For extra on this subject, learn the complete report “What’s in Your Funding Portfolio?” by Barbara Stewart, CFA. 

When you appreciated this publish, don’t neglect to subscribe to Enterprising Investor and the CFA Institute Analysis and Coverage Middle.


All posts are the opinion of the writer. As such, they shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially mirror the views of CFA Institute or the writer’s employer.

Picture credit score: ©Getty Photographs / KatarzynaBialasiewicz


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