Funds for Trust Portfolios in 2011

Many financial advisors encourage trustees to incorporate alternative assets in their trust portfolios to help reduce risk. While hedge funds and private equity are both popular alternative asset classes, they are not available to all trusts.

Typically, for a trust to qualify for these asset classes, it must be funded by individuals who already have $5 million or more in cash and traditional stocks and bonds. The Lommis Sayles Credit Long/Short fund helped trusts reach this requirement, but it has now closed to new investment.

Instead, traditional mutual funds and ETFs may be a better option to expose trusts to alternative asset classes. Trustees can higher managers to help chose the right ETF for the portfolio.

For clients wanting real estate exposure, the total transparency and liquidity of publicly listed REITs may be a better option than private REITs or direct ownership buildings. Additionally, many financial advisors believe that publicly listed stocks are a valued portfolio option because they are transparent and allow both the trustee and advisors to view the real value of the stock at any time.

See Scott Martin, Jerry Cooper, and Steve Maimes, Top Funds to Trust Portfolios in 2011, The Trust Advisor Blog, May 8, 2011.