Cleary Gull Advisors Publishes 2011 Senior Living Asset Allocation Study
Cleary Gull Advisors, Inc., based in Milwaukee, Wisconsin, conducts an annual Senior Living Asset Allocation Study, polling not-for-profit senior living organizations on topics such as their asset allocation, investment policy statement, and financial metrics. “The goal of the study is to create a tool that providers can use to benchmark their investment program vs. those of their peers, which we segment by credit rating and portfolio size,” said Steven Backus, Client Advisor—Health Care.
Cleary Gull recently released its 2011 report, based on data collected this spring from providers in the general rating categories of A+/- (15%), BBB+/- (29%), and Below Investment Grade (56%), which includes BB(+/-) and unrated. Organizations representing 20 states from across the nation are included in the 2011 results.
Findings from the study:
• 56% of investment portfolios are valued at $25 million or less; 15% are valued at $100 million or more.
• Mutual funds (83%) are the most common investment vehicle, followed by individual securities (58%).
• Half of the portfolios include alternative investments as a diversification or return enhancement tool—hedge fund of funds (50%), commodities (42%), REITs (38%), real estate (35%), hedge funds (23%), private equity (19%), other (12%).
• While transparency and valuation continue to be major concerns for auditors and rating agencies, 65% haven’t noticed any increased scrutiny regarding alternative investments in their portfolios.
• 92% of respondents work with an independent investment consultant; 77% of fees are based on a percentage of assets, and 23% are retainer-based.
• 43% rebalance their portfolios quarterly; 25% rebalance as needed, when positions get out of range, or opportunistically (several times a year).
• Only 16% recently made a major shift in their investment strategy and/or asset allocation.
• 100% have an investment policy statement; 60% updated that statement within the year; 34%, within three years.
• Despite recent market volatility, 92% are in compliance with their target asset allocation (up from 88% in 2010); 46% of statements define a required rate of return.
• Only 25% link their investment strategy to the underlying structure of their liabilities.
• Only 37% of investment policies contain socially responsible guidelines (up from 24% in 2009)
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