445 Park Avenue, 6th Floor New York, NY 10022 Phone (212) 406-0850 Fax (212) 406-0867 www.altfest.com

Fall, 2015

THE ALTFEST ADVISORY LETTER

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Insight Into the Altfest Investment Analyst Committee

At Altfest Personal Wealth Management, reviewing and optimizing your portfolio to ensure its maximum performance is one of the many important activities we do for our clients. In this issue, we’d like to give

you a backstage pass - an opportunity to understand the behind-the-scenes process that informs that performance.

Most of the give-and-take that occurs between your advisors and Altfest’s team of investment analysts takes place at meetings of the firm’s Quarterly Investment Analysts Committee. Last month, everyone from senior principals to client advisors and even summer interns assembled to hear seven of the firm’s investment analysts present macro overviews of their individual areas of coverage - Domestic Large Cap and Domestic Small Cap Equities, International Equities in both developed and emerging markets; Alternative Investment vehicles including Real-Estate; and International Bonds, Fixed Income and Municipal Bonds - to the firm’s Portfolio Action Group. Tracking progress against past projections and setting new projections for the next quarter, they explained the strategy of each investment’s managers and discussed ongoing research assignments. Using their expert insight into the state of the international economy, they focused on how it will impact the mutual funds and alternative investments under consideration. And there were plenty of questions from fellow analysts and advisors as they listened attentively to the comments, which often disclosed signature trading habits of well-known portfolio managers.

In fact, three separate entities contribute to decisions about what will change or stay the same in your portfolio. Working closely with our team of expert analysts, the four-person Portfolio Action Group provides feedback, develops investment strategy, and initiates projects. Following the quarterly analysts’ meeting, the Investment Committee formally approves and/or votes on changes to the firm’s holdings.

After the recent meeting, the Investment Committee decided on a number of changes aimed at increasing the value of client portfolios. In keeping with our value-oriented investment

Loans: Thinking Beyond the Mortgage

When a client was look-ing to buy

a building to expand his business, conven-tional wisdom might have suggested a down payment and a busi-ness real estate loan. Instead, we suggested a pledged asset line,

secured by liquid assets that we manage. As a result, he was able to finance the entire pur-chase at an attractive rate, avoiding sale of as-sets and potential capital gains.

Used properly, loans can be a vital tool in your financial arsenal. In many cases, the loan will be a mortgage. But in some cases, as with our client, loans secured by assets within your taxable investment portfolio may

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by: Steven CadoffCFA, CRPS®

Karen, Lewis and Andrew Altfest pose for a photo at our Annual Event Reception, held this past June at The Princeton Club.

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Loans: Thinking Beyond the Mortgage

be more appropriate. Many people are familiar with margin loans, which can be used to purchase additional marketable securities. Less well known are pledged as-set loans, which must be disbursed from the account and used for purchase of a home, boat, business invest-ment, etc. Pledged asset loans typically have higher loan-to-value ratios than margin loans - you may be eli-gible to borrow 60% of your stock portfolio with a PAL, compared with 50 percent with a margin loan.

Structured properly, a securitized loan can help meet short term ob-ligations. It is important that the loan-to-value ratio be reasonable, because if it is too high a market decline could result in a forced sale of assets (margin call) to meet the loan obligation. We will help you structure your loan appropriately so that the risk of a margin call is minimized.

Why a PAL instead of a mortgage? For one thing, interest rates are often much cheaper for securitized loans than for mortgages, potentially by one to two per-centage points. Lower rates can make a big difference in dollar terms especially for large loan balances.

In cases where you may only have a short time period left on your mortgage, the costs to refinance the mort-gage may be prohibitive. Or perhaps you don’t wish to extend the mortgage for a longer period. A securitized loan may be an opportunity to pay off the mortgage in full at a lower interest rate. The payback schedule for a securitized loan is flexible; it can be paid back over time or in a lump sum.

Tax efficiency is another potential consideration. Suppose you will be receiving cash flows in the near

future but need to pay taxes now. You may not want to sell assets in your account where you could realize capi-tal gains, creating more taxes. A securitized loan could be a useful option by utilizing it to pay your current tax bill and then paying off the loan when your cash flows are realized.

Loans can also be invaluable to business owners and entrepreneurs. Suppose your dental practice has a

need for a large capital outlay that will be recouped by the business over the short to in-termediate term. Instead of selling assets and potentially disrupting your asset allocation and incurring capital gains, a securitized loan may make sense.

These are just a few instances where a securitized loan can be of great benefit to you and your portfolio. Of course, mortgages and home equity loans have their own advantages, one being that the interest can be de-ductible, depending on the circumstances. Mortgage rates remain relatively low, and if you’re wondering if you might benefit by refinancing, we can help you fig-ure it out.

At Altfest, we can advise you on the various options to meet cash flow needs. We’ll outline the potential benefits and drawbacks of each approach so that you can make the decision that is right for you.

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Altfest Supports: The New York Common Pantry

In appreciation for referring your friends, colleagues, and family members to Altfest Personal Wealth Management®, we will make a donation to New York Common Pantry (NYCP). New York

Common Pantry is an organization in East Harlem that Karen Altfest helped found and lead as the first Chairperson three decades ago. NYCP now distributes 2 million meals a year in take home bags of groceries, meals served onsite, and many other related services, including nutrition education, to needy New Yorkers. For more information about the New York Common Pantry, visit their website at www.nycommonpantry.org.

Structured properly, a securitized loan can help

meet short term ob ligations.

Steven Cadoff is a Senior Financial Advisor at Altfest, advising clients on all aspects of their financial lives. Steven has earned the Chartered Financial Analyst (CFA) and Chartered Retirement Plan Specialist (CRPS) designations. He is a member of the New York Society of Securities Analysts and the CFA Institute.

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You are invited to visit the new home of Altfest Personal Wealth Management

Light refreshments will be served

Altfest Personal Wealth Management445 Park Avenue, 6th FloorCall 212-406-0850 to RSVP

Insight Into the Altfest Investment Analyst Committeestyle, for example, committee members voted to maintain a large international exposure as some areas of international equities are more reasonably priced than their domestic counterparts.

Said Executive Vice President Andrew Altfest - who serves on both the Investment Committee and the Portfolio Action Group - “Because we find that investments are more compelling outside of the United States, we’re overweight in Europe. We’re also adding exposure to emerging markets and looking at emerging markets debt.”

Citing concerns about rising U.S. interest rates, the committee decided to maintain a relatively short-term bond exposure. Analysts are also spending more time researching alternatives, that “We feel are less risky than stocks but with potentially more return than bonds,” Andrew noted. In one instance, the committee is looking at an alternative investment to replace one of the

mid-cap funds currently held in portfolios.

While some alternatives, like opaque mortgage-backed securities, made negative headlines in the recent past, he emphasized that the committee’s goal is to add the strategy, not the category. They are particularly examining event-driven

alternatives such as merger arbitrage that they believe will perform well in the current market. Gold mining stocks were another investment that was discussed. “As prices plummeted, we’re also closely monitoring gold,” Andrew added, “and we’ll

maintain exposure to non-agency mortgage market bonds which have done well for us, because they are attractively priced relative to other bonds and through them we can manage interest-rate risk”

In short, concerns about rising interest rates, the rejiggering of investments within international markets and the interest in alternatives constitute what Andrew Altfest calls “big changes” for the firm and client portfolios.

Thanks to your backstage pass, you heard it here first.

The Complimentary Altfest Portfolio Review

Specifically designed for family, friends,

and colleagues of Altfest clients, an Altfest Portfolio Review is essential to help ensure hard earned dollars are working their hardest. An Altfest Portfolio Review can help identify portfolio vulnerabilities that can prevent your family members, friends and colleagues from achieving important financial and life objectives. Why should you recommend Altfest Personal Wealth Management®? Because at Altfest, we take no commissions; we offer no products to sell; and therefore, we provide independent investment reviews, advice and recommendations. If you know someone who would benefit from an Altfest Portfolio Review, please contact us at 212-406-0850 today.

Three separate entities contribute to decisions about what will change or stay the

same in your portfolio.

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445 Park Avenue, 6th Floor New York, NY 10022

(212) 406-0850 Phone (212) 406-0867 Fax

www.altfest.com

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E-mail rrezvi@altfest.com to request an extra copy of this newsletter for a friend or loved one.

The Altfest Advisory LetterIN THIS ISSUE:• InsightIntotheAltfest Page 1InvestmentAnalystCommittee• Loans:Thinkingbeyond Page1

themortgage• SavetheDate Page3

j The Financial Times again named Altfest Personal Wealth Management® one of the 300 Top Registered Investment Advisors in the Nation.

k For the fourth straight year, Altfest Personal Wealth Management® was named a Leading Registered Investment Advisor by Financial Advisor magazine.

l Lew Altfest was again named to the ranking of the Top 100 Independent Financial Advisors in the Nation by Barron’s.

m Paul Palazzo, a Certified Options Advisor, contributed to a July Wall Street Journal article “4 mistakes people make with stock options.”

n Andrew Altfest was featured in the Financial Planning article “Real Estate Tightens Up.”

o Karen Altfest was featured in a recent Investor’s Business Daily article, where she discussed how Altfest Personal Wealth Management® continues to meet the needs of our clients. The article is titled “Keys to Success: A Q&A with top financial advisor Karen Altfest.”

p Mike Prendergast was featured in a May Wall Street Journal article, “Helping clients avoid social security mistakes,” a profile piece that highlights Mike’s passion for wealth management.

q Dawn Brown discussed “5 ways to save for your child’s college education” in the April edition of Black Enterprise magazine.

r Karen Altfest was featured in the May edition of Investment News, in the article “Firm built on trust responds to the needs of its clients,” highlighting the Altfest approach to client service.

If you would like a copy of any of the appearances mentioned, contact Reza Rezvi at (212) 406-0850 or at rrezvi@altfest.com. You can also stay up to date on our latest comments and most recent media appearances by visiting www.altfest.com/more

Altfest Personal Wealth Management: In the News