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When do Roth conversion strategies make sense for wealthy clients?
A Roth conversion involves transferring assets from a pre-tax traditional IRA or 401(k) into a Roth IRA, paying ordinary income tax on the converted amount today in exchange for tax-free growth...
How does step-up in basis at death work and how should it influence planning?
Step-up in basis is a tax provision under IRC Section 1014 that resets the cost basis of inherited property to its fair market value on the decedent's date of death...
Can you explain the wash sale rule in detail?
The wash sale rule under IRC Section 1091 disallows a loss deduction if the taxpayer purchases substantially identical securities within 30 days before or after selling at a loss...
How does tax loss harvesting work and what are the rules?
Tax loss harvesting (TLH) is the practice of selling positions at a loss to realize deductible capital losses while maintaining portfolio exposure...
What is proxy hedging and when is cross-currency hedging used?
Proxy hedging uses a correlated liquid currency to hedge expensive or restricted currency exposure at lower cost but with basis risk.
How is the value factor defined for currencies?
Currency value uses PPP or REER deviations to buy undervalued and sell overvalued currencies, diversifying carry and momentum factors.
How does currency momentum investing work?
Currency momentum buys recent winners and sells losers, driven by under-reaction to rate divergences and capital flows.
How does the currency carry trade work and what are its risks?
Carry trades earn interest differentials in tranquil markets but suffer crash risk during global risk-off episodes.
What are the main currency factors and how do they behave?
Currency factors (carry, momentum, value) deliver diversified alpha with low correlation to equity factors, best combined systematically.
How does dynamic currency hedging differ from static policy hedging?
Dynamic hedging adjusts hedge ratios using momentum, carry, volatility, or valuation signals — adding alpha but with regret risk.
What does a currency overlay manager actually do?
Overlay managers operate forward programs to implement policy hedge ratios on top of underlying multi-currency portfolios.
When should an investor leave foreign currency exposure unhedged?
Unhedged foreign equity benefits from diversification, long-horizon PPP reversion, and natural hedges against future foreign consumption.
Why is duration-neutrality important in factor investing?
Duration-neutrality isolates factor alpha from rate-risk drift. Hedge duration mismatch with Treasury futures so factor returns reflect the intended signal, not bulk market timing. 40-60% of naive factor alpha is duration-driven.
How does systematic factor investing differ from discretionary active in bonds?
Systematic factor investing uses consistent rules at scale ($10-50B+ capacity, 20-50 bps fees); discretionary uses judgment with more flexibility but less capacity ($1-5B) and higher fees. Hybrid approaches common.
Under what conditions can a performance record be 'ported' to a new firm?
GIPS portability requires: all investment decision-makers move, process unchanged, records support history, no break in record. If all four met, track record is portable as firm's own GIPS-compliant history...
How does ESG integration work in private markets and what are stewardship code responsibilities?
ESG integration in private markets differs materially from public markets because PE and PC managers have control or influence over portfolio companies...
What is litigation finance and what returns should investors expect?
Litigation finance (third-party funding of commercial lawsuits) provides non-recourse capital to plaintiffs or law firms in exchange for a contingent share of recoveries...
What is the advisor's role as a behavioral coach, and how does it add value beyond portfolio construction?
Behavioral coaching is the practice of helping clients make rational financial decisions by recognizing and mitigating cognitive and emotional biases. Research by Vanguard estimate...
How should advisors classify spending as essential versus discretionary for retirement planning?
Classifying spending as essential versus discretionary is the foundation of goals-based retirement planning. The classification determines funding priority, asset allocation, and t...
How does longevity risk pooling through annuities work, and what are 'mortality credits'?
Longevity risk pooling is the mechanism by which annuity providers can offer higher guaranteed income than self-insurance because they pool the mortality experience of many individ...
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