WALTHAM, MA – Ballentine Partners’ Senior Investment Advisor, Kyle Schaffer, was recently quoted in an Investment News article, “Risk-minded investors shift focus to alternative funds”. In this article, Kyle discusses the illiquidity premium he now expects from private investments and suggests liquid alternatives to traditionally illiquid asset classes.
“In more liquid asset classes, the investment is more easily reversible if the client changes their mind about it,” said Kyle Schaffer, a managing director in charge of manager research at Ballentine Partners LLC. The average client at Ballentine has investible assets of $50 million. Indeed, with his investors’ increased emphasis on liquidity, Mr. Schaffer’s now looking for significantly higher returns from illiquid private deals. Mr. Schaffer allocates money to both private and publicly traded alternative assets. He said a tax-friendly direct investment in timberland with a projected return of 6% to 9% with low correlation to other assets got a “ho-hum” reaction from investors when he first proposed it in 2006. They now think it sounds great. “The asset class hasn’t changed but the environment has,” he said. He also has investments in publicly traded vehicles – two of his current favorites being the Natixis Alpha Simplex Global Alternatives fund (GAFAX), which attempts to replicate the hedge fund universe benchmark, and the Highbridge Dynamic Commodities Strategy Fund (HDCSX), which was closed to new clients on May 2.