"Researchers at the University of Massachusetts at Amherst concluded that a portfolio that includes commodities performs better with less volatility than a portfolio without them. In fact, adding futures to a stock portfolio not only increases the return for the same level of risk, but also smoths out the standard deviation of that return. And over the past decade, commodity futures have held their own against both U.S. and international stocks and bonds, even while U.S. equities enjoyed one of the longest bull markets in history. What's more, futures historically have suffered less in down markets and recovered faster from setbacks than stocks." Dow Jones Investment Advisor, May 1997 page 46.
Hedge Funds
A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell distressed securities, trade options or bonds, and invest in just about any opportunity in any market where it foresees impressive gains at reduced risk. Hedge funds often hedge against downturns in the markets, which is especially important today with volatiliity and anticipation of correction in overheated stock markets. There are approcimately 14 distinct investment strategies used by hedge funds, each offering different degrees of risk and return. A macro hedge fund, for example, invests in stock and bonds markets and other investment opportunities, such as currencies, in hopes of profiting on significant shifts in such things as global interest rates and countries' economic policies. A macro hedge fund is more volatile but potentially faster growing than a distressed-securities hedge fund that buys the equity or debt of companies about to enter or exit financial distress. An equity hedge fund may be global or country specific, hedging against downturns in equity markets by shorting overvalued stocks or stock indexes. A relative value hedge fund takes advantage of price spread inefficiencies. Knowing the many different hedgee fund strategies is essential to capitalizing on their variety of investment opportunities. The blending of different strategies and asset classes in a fund of funds aims to provide a more stable long-term investment return than any of the individual funds. The advantage of a fund of funds is that it spreads investments among the premier hedge fund managers, seeking a maximize its return while keeping risk at an acceptable level. Hedge funds are extremely flexible in their investment options because they use financial instruments generally beyond the reach of mutual funds, which have SEC regulations and disclosure requirements that largely prevent them from using short selling, leverage, concentrated investments, and derivatives. In the last eight years, the number of hedge funds has risen by about 20 percent per year and the rate of growth in hedge fund assets has been even more rapid. Currently, there are estimated to be 4000-5000 hedge funds managing $200 - $300 billion. While the number and size of hedge funds are small relative to mutual funds, their growth reflects the importance of this alternative investment category for institutional investors and wealthy individual investors. Prepared for Airline Pilot Investment Group Inc. by @ Magnum Global Investments Ltd. 1997.
Tax Lien Certificates
Tax lien certificates can provide the investment solution for those looking to gain significant returns without high risk. Tax lien certificates are liens against property for unpaid taxes.
Viatical Settlements
Viatical settlements are the discounted purchase of life insurance policies from the terminally ill. Returns are secured and can pay up to 42% depending on the structure of the contract.