Classic investment style boxes are out and themes are in, Burt White, LPL Financials managing director of research, told advisors at the independent broker dealers inaugural alternative investments symposium in New York City on Thursday.
Weve lived with the classic Morningstar style box approach for a long time, but that doesnt work anymore, White said. The nine box model is toast.
Rather, advisors should be thinking about investment themes, White said. He offered ten themes to consider instead: income, cyclicals, defensives, longevity, scarcity, tax-advantaged, stable earnings, variable earnings, dividends, and non-dollar. The pie charts of the past wont be the pie charts of the future, White said.
He also suggested advisors be tactegic with their asset allocation, a mix of both tactical, and strategic. Its not so much about whether or not to use alternative investments, its about having an alternative view of investing, White said.
While many investors and advisors got caught up with impressive returns and began to see alternative investments as the holy grail of investment products, now White said, they must see it for what it is.
Alternative investing is not the holy grail, but it is another tool in your investment toolbox, he said. And if you use it in the right way, at the right time, its a superbly powerful tool.
Currently, Whites team sees potential opportunity in three investment themes; income, taxes and scarcity.
