Committed to helping our clients succeed
Institutional Asset Management
The Coronavirus and Market Volatility
Fears about the COVID-19 outbreak led the Standard & Poor’s 500 Index into a correction (a drop of 10% or more from a recent high) in just six days, the fastest time to a correction from an all-time high ever. However, a few days afterward, stocks rallied, with the S&P 500—which recovered more than 40% of its losses from its February 19 close to its midday low on February 28—and other indexes notching record point gains. Since then, stocks have been extremely volatile.
When markets fluctuate, sticking to the plan you’ve laid out becomes more important than ever.
Benefits of Working with an Independent Investment Adviser
AIS CORPORATE RELATIONSHIP
On October 5, 2020, the Great Barrington Declaration, co-authored by three eminent professors of epidemiology, was released to the public following a gathering hosted by our parent company, the American Institute for Economic Research (AIER). The meeting’s objective was “to discuss the policy response to the virus SARS-Cov-2, and its public health effects on the poor, children, business, the arts, and trade.”
Since its publication, the Declaration has roused substantial controversy and prompted significant press coverage and commentary, some of which referenced our firm. Unfortunately, certain articles contained gross inaccuracies concerning the services we provide and the precise business and operating relationship between our two firms.
Business Relationship: While a wholly-owned subsidiary of AIER, AIS is a separate legal entity that has been an SEC-registered investment adviser since 1978. Although governed by a Board of Directors appointed by AIER’s Trustees, AIS conducts its investment advisory business independent of AIER’s day-to-day operations.
As fiduciaries to all our clients, we place the interests of our clients ahead of our interests including those of our parent organization. In our regulatory filings we provide the following disclosure of AIER’s ownership of AIS and potential conflicts of interest that may result from this corporate structure.
All clients and prospective clients should be aware of the following with respect to AIS and AIS’ parent, AIER:
- AIER, through trusts established under its charitable giving programs, is AIS’ largest advisory client;
- AIS separately manages certain investment accounts for various AIS and AIER Directors, Employees and AIER Trustees and voting members;
- The AIS Board of Directors reviews the compensation of AIS employees; and
- The AIS Board of Directors declares any dividends paid to AIER, as sole shareholder of AIS.
If any of the relationships described above give rise to a conflict of interest, AIS endeavors to put the interests of its non-affiliated clients (i.e., those clients not specified above) first.
Investment Strategies: AIER’s Investment Committee is responsible for oversight of AIS’ management of AIER’s assets (which include split-interest trusts and corporate reserves), over which AIS exercises full investment discretion. AIS does not operate any private funds. We manage clients’ assets as separate accounts and do not co-mingle AIER assets with other AIS client accounts.
We formulate our specific investment strategies based on independent research and sources. In fact, we track and monitor the sources of all research specifically developed for AIS and used in our strategies. Our investment strategy, as disclosed in our Firm Brochure, states:
The investment approach underlying our investment services and publications can be characterized as structured, passive, asset allocation. This approach to wealth management is based on the major tenets of Modern Portfolio Theory (“MPT”) which holds that capital markets are highly efficient at pricing securities and investors are rewarded with returns for accepting risk. Investment allocations regarding AIS’ portfolio management services are based on our understanding of client objectives and needs formulated pursuant to an initial financial plan. Clients can impose reasonable restrictions on investing in specific company securities, industries or types of financial products.”
Serving as fiduciaries to our clients is not a theoretical concept for our asset managers nor our staff. Conducting our business ethically and prioritizing the best interests of each of our clients are essential components of our operations and elemental requirements of each employee.
We truly value the relationships we have established with our clients over many years. We also recognize the strongly divergent opinions prompted by the Declaration. We welcome the opportunity to listen and respond to your concerns.