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ӱ A boutique wealth advisory firm focused on preserving and enhancing our clients’ wealth.
ӱ Founded in 1984 to manage capital for our founders, including John Anderson (a Forbes 400 billionaire and a benefactor of UCLA’s Anderson School of Management and Children's Hospital Los Angeles).
ӱ Investors dedicated to quality in business practices and investment approach.
ӱ $8.9 billion in assets under management as of September 2014.
ӱ Ranked among the top 10 on Barron’s nationwide list of Top Independent Wealth Advisors for two years running.*
Personal Relationships Based on Trust• Genuineinteractionwithattentivelisteningandunderstandingofyourneeds.
• Prudentadvicebaseduponyourfinancialandlifestylegoals.
• Personalizedinvestmentstrategiesdesignedforyouruniquecircumstances,
investmentobjectives,timehorizon,risktolerance,andtaxsituation.
• Averageclientrelationshipof11yearswitharetentionrateofover95%.
Credentialed Staff Dedicated to Your Goals• GuidancefromexperiencedCFA,CFP®,MBA,AIF®,andCPWA®professionals.
• Advisorswithover100yearsofcollectiveindustryexperience.
• Investmentprofessionalswhoinvestalongsideyouinproprietarystrategies.
The Right Size Firm For You• Largeenoughtosupportyouwithabroadteamofoutstandinginvestment
professionals,excellentresearchresources,relationshipswithvettedoutside
professionals,andadiversifiedmenuofproductofferings.
• Yetsmallenoughtotakethetimetolistenandprovideyouwithattentive
service,honestandopencommunication,anduncommonaccesstoour
seniormanagementandinvestmentprofessionals.
Confidence in Our Proven Track Record• 30yearsofadvisingclientsonarangeofwealthmanagementtopics,
includinghowtoblendtraditionalandalternativeinvestmentstrategies.
• Ahistoryofdisciplinedriskmanagementandgreatdefenseduringdifficult
marketenvironments,coupledwithauniquerangeofofferingstocapitalize
onmarketupturnstohelpmaximizeyourgains.
Multiple Options for Achieving Your Goals• Cost-effectiveaccesstobothproprietaryinvestmentstrategiesand
thoroughlyresearchedoutsidemanagers.
• Exposuretofixedincome,equity,mutualfunds,ETFs,andalternatives,
suchasprivateequity,realestate,energy,andhedgefunds.
• Choiceofinvestinginfundsorportfoliosofindividualsecurities.
About Us Why Kayne Anderson Rudnick?
“Do The Right Thing” John Anderson - Founder
“Do the right thing” was a frequently used
phrase by Mr. Anderson. It represents a value
system that provided the foundation for all
of his businesses, including Kayne Anderson
Rudnick. It is a guiding principle in our firm, a
mantra that permeates our culture and sums
up our commitment to maintain the highest
level of integrity and honesty in our approach
to our work, our colleagues, and, most
importantly, our clients.
*Barron’s article available on kayne.com
For more information connect with us via social media,
visit us at kayne.com, or call us at 800.231.7414.
1800 Avenue of the Stars, Second Floor
Los Angeles, California 90067
580 California Street, Suite 1750
San Francisco, California 94104
#10 Largest Fee-Only RIA #14 Fastest Growing Fee-Only RIA
#17 Biggest Gainer RIA
Ranked Among Top 10 Independent
Financial Advisors
2013 and 2014
Top 300Financial Advisors
IMPLEMENT YOUR PLAN
GET TO KNOW YOU BUILD YOUR PLAN MONITOR PLAN AND INFORM YOU
Our Approach
Next we create a customized investment proposal and a comprehensive investment plan as a basis for future discussions and decisions. This includes in-depth analysis of your current investments, asset allocation, cost basis, and any tax considerations.
We provide solutions across traditional asset classes and alternative investments through both proprietary strategies and thoroughly researched outside managers. We then transition your current portfolio to the new allocation designed to meet your investment objectives.
On an ongoing basis, we actively oversee your investment strategy, track long-term and short-term financial goals, assess risk and returns, rebalance your portfolio when prudent, adjust with changes in capital markets, and keep you informed.
We develop a thorough understanding of your background and current financial situation. This includes your current investment structure, investment history, income needs, investment objectives, risk tolerance, and family arrangement.
Investment Strategies Available to You
OPPORTUNISTIC
We use a well defined
set of criteria to identify
sound investment
opportunities across a
variety of asset classes.
THOUGHTFUL
We value our fiduciary
responsibility, and we
pay attention to all
of the details so you
don’t have to.
STRATEGIC
We carefully manage
risk so you are
prepared for difficult
markets with a well
diversified portfolio.
We place a high
priority on the
preservation of your
capital rather than
seeking outsized gains
with sizable risk.
RESPONSIBLE
Services to Help Achieve Your Goals
Portfolio Transition Analysis
Strategic Asset Allocation and
Portfolio Design
Comprehensive Financial Planning
Tax Management Oversight
Portfolio Monitoring and
Risk Management
Qualities of Our Partnership With You
Investment Strategy Due Diligence and
Selection
Client
Municipal Bonds
• National
• State Specific
Taxable Bonds
• Core• Government• Total Return• High Yield• Global• Emerging Markets
All Cap
Large Cap
Mid Cap
Small/SMID Cap
International
Emerging Markets
Core
Value
Growth
Energy Infrastructure (MLPs)
Commodities
Global Macro
Inflation Protection
Long Short Equity Funds
Long Short Bond Funds
Managed Futures
Multi-Strategy
Real Estate
Sector
Fixed Income Equities Alternative Investments
For more information connect with us via social media,
visit us at kayne.com, or call us at 800.231.7414.
1800 Avenue of the Stars, Second Floor
Los Angeles, California 90067
580 California Street, Suite 1750
San Francisco, California 94104
With stocks nearrecord highs, thesepros are stayingfocused on thelong term.
Dal
e St
epha
nos
for Barron’s
%www.barrons.comTHE DOW JONES BUSINESS AND FINANCIAL WEEKLY AUGUST 25, 2014
(over please)
The Publisher’s sale Of This rePrinT DOes nOT COnsTiTuTe Or imPly any enDOrsemenT Or sPOnsOrshiP Of any PrODuCT, serviCe, COmPany Or OrganizaTiOn.Custom Reprints 800.843.0008 www.djreprints.com DO NOT EDIT OR ALTER REPRINT••• /REPRODUCTIONS NOT PERMITTED 49264
Top 10 Advisor 2013 and 2014
Scaling the HeightsThe following has been excerpted
By Steve Garmhausen
Barron’s has ranked independent advisors since 2007. As with our other advisor listings, which include names from big Wall Street firms, this one is based on assets under management, quality of practices, revenue that ad-visors generate for their firms, and other factors.
Investment performance is not an explicit criterion, because the clients of the advisors have widely differing
goals. Since many are quite wealthy—the typical customer of the top 100 has a net worth of $19.66 million—the goal is often asset preservation.
But clients of the top 100 tend to be very satisfied, rewarding the ad-visors with lots of referrals. The top 100 indies as a group enjoy a client retention rate of 98%.
This year’s top 100 independent advisors are thriving. Average team
assets for 2014 were $4.3 billion, com-pared with $3.6 billion in 2013. Reve-nues jumped in 2014, as well, with the average team pulling in $20 million in 2014, up from $16.2 million in 2013.
The upward trend isn’t new: Over the past five years, average assets among our top 100 independent advi-sors have risen a total of 43%, all at a time when the stock market rose by 116%.
COVER STORYWith stocks near record levels, the top 100 independent financial advisors are keeping focused on the long term. Our annual roster.
The ranking is based on data provided by individual advisors and their firms. Advisor data is confirmed via regulatory databases, cross-checks with securities firms and conversations with individual advisors. The formula Barron's uses to rank advisors is proprietary. It has three major components: assets managed, revenue produced and quality of practice. Investment returns are not a component of the rankings because an advisor's returns are dictated largely by the risk tolerance of clients. The quality-of-practice component includes an evaluation of each advisor's regulatory record.
The Publisher’s sale of this reprint does not constitute or imply any endorsement or sponsorship of any product, service or organization. Crain Communications 732.723.0569. DO NOT EDIT OR ALTER REPRINTS. REPRODUCTIONS ARE NOT PERMITTED.
© Entire Contents copyright by Crain Communications Inc. All rights reserved.
The Leading News Source for Financial Advisers InvestmentNews.com
June 2, 2014 Reprinted with permission from–
We are pleased to announce our rankings in the following categories:
Largest fee-only RIA ranking is based on total assets under management. Biggest gainers rank-ing is based on percentage growth in total assets for fee-only RIAS.
•#10 Ranking – Largest Fee-Only RIAs
•#14 Ranking – Fastest Growing Fee-Only RIAs
•#17 Ranking – Biggest GainersPro
of
Largest fee-only Registered Investment Advisor (RIA) ranking is based on total assets under management. Fastest growing fee-only RIA ranking is based on the three-year compound annual growth rate. Biggest gainers ranking is based on percentage growth in total assets for fee-only RIAs.
RANK FIRM CATEGORY
10 Kayne Anderson Rudnick Largest Fee-Only RIAs
14 Kayne Anderson Rudnick Fastest Growing Fee-Only RIAs
17 Kayne Anderson Rudnick Biggest Gainers
RIA Rundown 2014
We are pleased to announce our Registered Investment Advisor rankings in the following categories for:
The Publisher’s sale of this reprint does not constitute or imply any endorsement or sponsorship of any product, service or organization. Crain Communications 732.723.0569. DO NOT EDIT OR ALTER REPRINTS. REPRODUCTIONS ARE NOT PERMITTED.#4621
© Entire Contents copyright by Crain Communications Inc. All rights reserved.
Reprinted with permission from–
THE INTERNATIONAL NEWSPAPER OF MONEY MANAGEMENT
PIonline.com
®
February 17, 2014
S P E C I A L R E P O R T
TOP -PERFORMING MANAGERSTOP -PERFORMING MANAGERS
Gross NetFive-year return Style return return
Composite U.S.stock
Composite U.S.growth equityGross Net
Five-year return return return
Cushing MLP Inst’l Alpha Strategy U.S. SA equity energy 38.28% 36.92%
Harvest MLP Alpha Strategy U.S. SA equity energy 37.27% 36.37%
Allianz U.S. Ultra Micro Cap U.S. SA small growth 36.42% 34.81%
Zevenbergen Z/Tech U.S. SA technology 36.12% 34.85%
Granahan Inv. Mgmt. - Sm. Cap Focused Gro. U.S. SA small growth 36.04% 34.86%
Ironwood Inv. Mgmt. Conc Small Cap Val. U.S. SA small blend 35.20% 33.35%
Kornitzer Emerging Opportunities U.S. SA small growth 34.53% 32.53%
Kayne Anderson Rudnick SC Quality Select U.S. SA small growth 3344..4433%% 3322..7722%%
PENN Capital Micro Cap Equity U.S. SA small blend 34.37% 33.62%
Bares Capital Mgmt. Micro-Cap Equity U.S. SA small growth 34.28% 32.63%
Allianz U.S. Ultra Micro Cap 36.42% 34.81%
Granahan Small Cap Foc. Gro. 36.04% 34.86%
Kornitzer Emerging Opportunities 34.53% 32.53%
Kayne Anderson Rudnick SC Qual. Sel. 3344..4433%% 3322..7722%%
Bares Capital Mgmt. Micro-Cap Eq. 34.28% 32.63%
Kennedy Small Cap Fund. Growth 33.30% 32.06%
Essex Inv. Mgmt. - Micro Cap Growth 33.09% 31.82%
Granahan Inv. Mgmt. Sm. Cap Disc. 32.26% 31.78%
Rice Hall James Sm. Cap Opp. 32.22% 31.17%
Sands Select Growth Equity 32.11% 31.41%
%www.barrons.comTHE DOW JONES BUSINESS AND FINANCIAL WEEKLY AUGUST 18, 2014
(over please)
The Publisher’s sale Of This rePrinT DOes nOT COnsTiTuTe Or imPly any enDOrsemenT Or sPOnsOrshiP Of any PrODuCT, serviCe, COmPany Or OrganizaTiOn.Custom Reprints 800.843.0008 www.djreprints.com DO NOT EDIT OR ALTER REPRINT••• /REPRODUCTIONS NOT PERMITTED 49203
THEBESTADVICE
Independent financial advisor Spuds Powell always playsa strong defense. Howhe’s preparing for the nextcorrection in stocks.
Master ofDisasterbyMichael Vallo
MOST FINANCIAL ADVISORS LIVE IN FEAR OF THE END OF THE BULL
market. Spuds Powell, an advisor at Kayne Anderson RudnickWealth Management, is almost looking forward to it.“A lot of the folks that I interact with on a daily basis are
concerned about a 10%, 20%, 30% correction in the equity markets,”says Powell. “When that day comes, whether it starts soon orsometime down the road, that will play beautifully into our firm’sgreatest strengths.”The former Cornell University football player prides himself on
playing great defense in a bad market. His stocks often hold upbetter than others, thanks to his insistence that companies haveclear competitive advantages and low debt. And his sizable holdingsof alternative assets, such as hedge funds and managed futures, of-fer real ballast. In 2008, when the stock market plunged 38%, Pow-ell’s typical portfolio was down a more manageable 20%.Based in the Century City area of Los Angeles, Powell was born
in California and eventually moved with his family to Hong Kong,where his father worked for a shipping company. Powell returnedto California for high school, where he met his wife, Ann.Powell, 43, is a late entrant to financial advising. He joined
Kayne Anderson, an independent firm, in 2004 from investmentoutfit Financial Engines, where he provided corporations withretirement programs. After just a decade in the business, he sitsat No. 5 in Barron’s most recent list of top 100 independentadvisors. He is No. 6 in California among all advisors, includingthose at the big Wall Street firms.Powell admits he underestimated his early challenges. “I really
didn’t have any existing relationships with referral sources; it wasa pretty daunting task at first,” he says. But he quickly learnedit was more effective to cultivate a handful of relationships thatwould in time lead to referrals than to try to get a lot of clientsall at once. Today, Powell’s four-person team manages $1 billionfor 150 clients.Powell’s clients are on average in their mid-60s, and their main
priorities are preserving wealth while keeping costs down. Thatpriority is reflected in his typical asset allocation. Alternative invest-ments, for instance, make up 11% of the typical portfolio—a bufferagainst a downturn in stocks. Powell is particularly bullish on masterlimited partnerships: “They are currently paying about a 6% to 6.5%yield, which looks pretty good in a world where the yield on the 10-year Treasury bond is hovering around 2.5%.” Powell points out thatMLPs have generated a positive return in four of the past five downyears for the stock market.Real estate rounds out Powell’s alternatives allocation. Lately, he
has liked off-campus student housing. The demand for lower-costpublic universities has risen, he says, but dormitory growth hasn’tkept pace, so Powell and team developed a couple of funds thatinvest in off-campus housing.Powell has hardly abandoned stocks: They constitute 66% of his
typical allocation. Powell and his team like to pick their own stocks,even as many advisors are favoring ETFs or outsourcing the
investment function altogether. “When you own those individualstocks, you have the luxury of selling the handful of losers andusing those losses to offset realized gains in other parts of the port-folio,” says Powell. The strategy also avoids the fees that come withfunds and ETFs.
One of Powell’s long-term holdings isWD-40 Company (ticker:WDFC), maker of the famed lubricant. His logic: Nearly everybodyhas a can in their basement or garage ready to quiet a squeakydoor—and would be hard-pressed to name a competitor. That meansthe company can save a lot on marketing. “WD-40 is extremely prof-itable,” Powell says. “They’ve got very little debt, and they generatea significant amount of cash flows.”The remaining 23% of a typical portfolio is devoted to fixed
income, often municipal bonds. Here, too, Powell prepares for theworst. “If an earthquake were to damage a municipal golf courseand one of the major pipes used to transport water from theSierras into the [Los Angeles] Basin, it is safe to assume that thewater pipeline is going to get fixed a lot quicker than the fourthfairway of a golf course,” he says. “We’re not interested in buyingthe municipal bond that was used to build that golf course; we arevery interested in buying that water-district bond.”If history is any guide, count on Powell to avoid the next sand
trap. ¤
ALTERNATIVE VIEW Powell favorsa heavy dose of investments likemaster limited partnerships.
The StrategyLocation: Los AngelesClients: 150Typical Account: $7 million
Powell and his team are stickingwith stocks.
PhotographbyThomasMichaelAllemanforBarron’s
THEBESTADVICE
Independent financial advisor Spuds Powell always playsa strong defense. Howhe’s preparing for the nextcorrection in stocks.
Master ofDisasterbyMichael Vallo
MOST FINANCIAL ADVISORS LIVE IN FEAR OF THE END OF THE BULL
market. Spuds Powell, an advisor at Kayne Anderson RudnickWealth Management, is almost looking forward to it.“A lot of the folks that I interact with on a daily basis are
concerned about a 10%, 20%, 30% correction in the equity markets,”says Powell. “When that day comes, whether it starts soon orsometime down the road, that will play beautifully into our firm’sgreatest strengths.”The former Cornell University football player prides himself on
playing great defense in a bad market. His stocks often hold upbetter than others, thanks to his insistence that companies haveclear competitive advantages and low debt. And his sizable holdingsof alternative assets, such as hedge funds and managed futures, of-fer real ballast. In 2008, when the stock market plunged 38%, Pow-ell’s typical portfolio was down a more manageable 20%.Based in the Century City area of Los Angeles, Powell was born
in California and eventually moved with his family to Hong Kong,where his father worked for a shipping company. Powell returnedto California for high school, where he met his wife, Ann.Powell, 43, is a late entrant to financial advising. He joined
Kayne Anderson, an independent firm, in 2004 from investmentoutfit Financial Engines, where he provided corporations withretirement programs. After just a decade in the business, he sitsat No. 5 in Barron’s most recent list of top 100 independentadvisors. He is No. 6 in California among all advisors, includingthose at the big Wall Street firms.Powell admits he underestimated his early challenges. “I really
didn’t have any existing relationships with referral sources; it wasa pretty daunting task at first,” he says. But he quickly learnedit was more effective to cultivate a handful of relationships thatwould in time lead to referrals than to try to get a lot of clientsall at once. Today, Powell’s four-person team manages $1 billionfor 150 clients.Powell’s clients are on average in their mid-60s, and their main
priorities are preserving wealth while keeping costs down. Thatpriority is reflected in his typical asset allocation. Alternative invest-ments, for instance, make up 11% of the typical portfolio—a bufferagainst a downturn in stocks. Powell is particularly bullish on masterlimited partnerships: “They are currently paying about a 6% to 6.5%yield, which looks pretty good in a world where the yield on the 10-year Treasury bond is hovering around 2.5%.” Powell points out thatMLPs have generated a positive return in four of the past five downyears for the stock market.Real estate rounds out Powell’s alternatives allocation. Lately, he
has liked off-campus student housing. The demand for lower-costpublic universities has risen, he says, but dormitory growth hasn’tkept pace, so Powell and team developed a couple of funds thatinvest in off-campus housing.Powell has hardly abandoned stocks: They constitute 66% of his
typical allocation. Powell and his team like to pick their own stocks,even as many advisors are favoring ETFs or outsourcing the
investment function altogether. “When you own those individualstocks, you have the luxury of selling the handful of losers andusing those losses to offset realized gains in other parts of the port-folio,” says Powell. The strategy also avoids the fees that come withfunds and ETFs.
One of Powell’s long-term holdings isWD-40 Company (ticker:WDFC), maker of the famed lubricant. His logic: Nearly everybodyhas a can in their basement or garage ready to quiet a squeakydoor—and would be hard-pressed to name a competitor. That meansthe company can save a lot on marketing. “WD-40 is extremely prof-itable,” Powell says. “They’ve got very little debt, and they generatea significant amount of cash flows.”The remaining 23% of a typical portfolio is devoted to fixed
income, often municipal bonds. Here, too, Powell prepares for theworst. “If an earthquake were to damage a municipal golf courseand one of the major pipes used to transport water from theSierras into the [Los Angeles] Basin, it is safe to assume that thewater pipeline is going to get fixed a lot quicker than the fourthfairway of a golf course,” he says. “We’re not interested in buyingthe municipal bond that was used to build that golf course; we arevery interested in buying that water-district bond.”If history is any guide, count on Powell to avoid the next sand
trap. ¤
ALTERNATIVE VIEW Powell favorsa heavy dose of investments likemaster limited partnerships.
The StrategyLocation: Los AngelesClients: 150Typical Account: $7 million
Powell and his team are stickingwith stocks.
PhotographbyThomasMichaelAllemanforBarron’s
Most financial advisors live in fear of the end of the bull market. Spuds Powell, an advisor at Kayne Anderson Rudnick Wealth Management, is almost looking forward to it.
“A lot of the folks that I interact with on a daily basis are concerned about a 10%, 20%, 30% correction in the equity markets,” says Powell. “When that day comes, whether it starts soon or sometime down the road, that will play beautifully into our firm’s greatest strengths.”
The former Cornell University football player prides himself on playing great de-fense in a bad market. His stocks often hold up better than others, thanks to his insistence that companies have clear com-petitive advantages and low debt. And his sizable holdings of alternative assets, such as hedge funds and managed futures, offer real ballast. In 2008, when the stock market plunged 38%, Powell’s typical portfolio was down a more manageable 20%.
Based in the Century City area of Los Angeles, Powell was born in California and eventually moved with his family to Hong Kong, where his father worked for a ship-ping company. Powell returned to California for high school, where he met his wife, Ann.
Powell, 43, is a late entrant to financial advising. He joined Kayne Anderson, an independent firm, in 2004 from investment outfit Financial Engines, where he provid-ed corporations with retirement programs. After just a decade in the business, he sits at No. 5 in Barron’s most recent list of top
100 independent advisors. He is No. 6 in California among all advisors, including those at the big Wall Street firms.
Powell admits he underestimated his early challenges. “I really didn’t have any existing relationships with referral sources; it was a pretty daunting task at first,” he says. But he quickly learned it was more ef-fective to cultivate a handful of relationships that would in time lead to referrals than to try to get a lot of clients all at once. Today, Powell’s four-person team manages $1 bil-lion for 150 clients.
Powell’s clients are on average in their mid-60s, and their main priorities are pre-serving wealth while keeping costs down.
THEBESTADVICE
Independent financial advisor Spuds Powell always playsa strong defense. Howhe’s preparing for the nextcorrection in stocks.
Master ofDisasterbyMichael Vallo
MOST FINANCIAL ADVISORS LIVE IN FEAR OF THE END OF THE BULL
market. Spuds Powell, an advisor at Kayne Anderson RudnickWealth Management, is almost looking forward to it.“A lot of the folks that I interact with on a daily basis are
concerned about a 10%, 20%, 30% correction in the equity markets,”says Powell. “When that day comes, whether it starts soon orsometime down the road, that will play beautifully into our firm’sgreatest strengths.”The former Cornell University football player prides himself on
playing great defense in a bad market. His stocks often hold upbetter than others, thanks to his insistence that companies haveclear competitive advantages and low debt. And his sizable holdingsof alternative assets, such as hedge funds and managed futures, of-fer real ballast. In 2008, when the stock market plunged 38%, Pow-ell’s typical portfolio was down a more manageable 20%.Based in the Century City area of Los Angeles, Powell was born
in California and eventually moved with his family to Hong Kong,where his father worked for a shipping company. Powell returnedto California for high school, where he met his wife, Ann.Powell, 43, is a late entrant to financial advising. He joined
Kayne Anderson, an independent firm, in 2004 from investmentoutfit Financial Engines, where he provided corporations withretirement programs. After just a decade in the business, he sitsat No. 5 in Barron’s most recent list of top 100 independentadvisors. He is No. 6 in California among all advisors, includingthose at the big Wall Street firms.Powell admits he underestimated his early challenges. “I really
didn’t have any existing relationships with referral sources; it wasa pretty daunting task at first,” he says. But he quickly learnedit was more effective to cultivate a handful of relationships thatwould in time lead to referrals than to try to get a lot of clientsall at once. Today, Powell’s four-person team manages $1 billionfor 150 clients.Powell’s clients are on average in their mid-60s, and their main
priorities are preserving wealth while keeping costs down. Thatpriority is reflected in his typical asset allocation. Alternative invest-ments, for instance, make up 11% of the typical portfolio—a bufferagainst a downturn in stocks. Powell is particularly bullish on masterlimited partnerships: “They are currently paying about a 6% to 6.5%yield, which looks pretty good in a world where the yield on the 10-year Treasury bond is hovering around 2.5%.” Powell points out thatMLPs have generated a positive return in four of the past five downyears for the stock market.Real estate rounds out Powell’s alternatives allocation. Lately, he
has liked off-campus student housing. The demand for lower-costpublic universities has risen, he says, but dormitory growth hasn’tkept pace, so Powell and team developed a couple of funds thatinvest in off-campus housing.Powell has hardly abandoned stocks: They constitute 66% of his
typical allocation. Powell and his team like to pick their own stocks,even as many advisors are favoring ETFs or outsourcing the
investment function altogether. “When you own those individualstocks, you have the luxury of selling the handful of losers andusing those losses to offset realized gains in other parts of the port-folio,” says Powell. The strategy also avoids the fees that come withfunds and ETFs.
One of Powell’s long-term holdings isWD-40 Company (ticker:WDFC), maker of the famed lubricant. His logic: Nearly everybodyhas a can in their basement or garage ready to quiet a squeakydoor—and would be hard-pressed to name a competitor. That meansthe company can save a lot on marketing. “WD-40 is extremely prof-itable,” Powell says. “They’ve got very little debt, and they generatea significant amount of cash flows.”The remaining 23% of a typical portfolio is devoted to fixed
income, often municipal bonds. Here, too, Powell prepares for theworst. “If an earthquake were to damage a municipal golf courseand one of the major pipes used to transport water from theSierras into the [Los Angeles] Basin, it is safe to assume that thewater pipeline is going to get fixed a lot quicker than the fourthfairway of a golf course,” he says. “We’re not interested in buyingthe municipal bond that was used to build that golf course; we arevery interested in buying that water-district bond.”If history is any guide, count on Powell to avoid the next sand
trap. ¤
ALTERNATIVE VIEW Powell favorsa heavy dose of investments likemaster limited partnerships.
The StrategyLocation: Los AngelesClients: 150Typical Account: $7 million
Powell and his team are stickingwith stocks.
PhotographbyThomasMichaelAllemanforBarron’s
That priority is reflected in his typi-cal asset allocation. Alternative invest-ments, for instance, make up 11% of the typical portfolio—a buffer against a downturn in stocks. Powell is partic-ularly bullish on master limited part-nerships: “They are currently paying about a 6% to 6.5% yield, which looks pretty good in a world where the yield on the 10-year Treasury bond is hovering around 2.5%.” Powell points out that MLPs have generated a posi-tive return in four of the past five down years for the stock market.
Real estate rounds out Powell’s al-ternatives allocation. Lately, he has liked off-campus student housing. The demand for lower-cost public univer-sities has risen, he says, but dormito-ry growth hasn’t kept pace, so Powell and team developed a couple of funds that invest in off-campus housing.
Powell has hardly abandoned stocks: They constitute 66% of his typical allocation. Powell and his team like to pick their own stocks, even as many advisors are favoring ETFs or outsourcing the investment function altogether. “When you own those in-dividual stocks, you have the luxury of selling the handful of losers and using those losses to offset realized gains in other parts of the portfolio,” says Powell. The strategy also avoids the fees that come with funds and ETFs.
One of Powell’s long-term holdings is WD-40 Company (ticker: WDFC), maker of the famed lubricant. His logic: Nearly everybody has a can in their basement or garage ready to quiet a squeaky door—and would be hard-pressed to name a competitor. That means the company can save a
lot on marketing. “WD-40 is extreme-ly profitable,” Powell says. “They’ve got very little debt, and they generate a significant amount of cash flows.”
The remaining 23% of a typical portfolio is devoted to fixed income, often municipal bonds. Here, too, Powell prepares for the worst. “If an earthquake were to damage a munici-pal golf course and one of the major pipes used to transport water from the Sierras into the [Los Angeles] Basin, it is safe to assume that the water pipeline is going to get fixed a lot quicker than the fourth fairway of a golf course,” he says. “We’re not interested in buying the municipal bond that was used to build that golf course; we are very interested in buy-ing that water-district bond.”
If history is any guide, count on Powell to avoid the next sand trap. n
This report is based on the assumptions and analysis made and believed to be reasonable by Advisor. However, no assurance can be given that Advisor’s opinions or expectations will be correct. This report is intended for informational purposes only and should not be considered a recommendation or solicitation to purchase securities. Although information presented in the article was obtained from and is based on an interview with Barron’s, the Advisor does not guarantee the accuracy of the information, and it may be incomplete or condensed. Past performance is not a guarantee of future results.
Kayne Anderson Rudnick in Recent Media
September 16, 2014 Kayne Anderson Rudnick CIO Doug Foreman was quoted in a Reuters article titled “S&P 500 Powers on in a Market without Big Pullback.” Mr. Foreman commented on how the S&P 500, which recently pushed through 2,000 for the first time in history, has not gone through a by-the- book 10 percent decline since October of 2011. Rather stocks seem to be modestly self-correcting while continuing to grow. "Investors have had plenty of opportunities to take some profits, and they have, but the reality is these businesses continue to grow,” said Mr. Foreman.
September 2, 2014
Kayne Anderson Rudnick CIO Doug Foreman was quoted in a Bloomberg article titled "Identity Crisis In S&P 500 As Range Of Valuations Narrows.” Mr. Foreman commented on the greater balance that exists in this particular bull market, which unlike the dot-com boom, has stocks from almost all industries climbing. “There are lots of companies and industries doing very well, so the
market doesn’t feel the need to price one group much higher than everything else. It’s much better balance,” said Mr. Foreman.
August 27, 2014
Kayne Anderson Rudnick CIO Doug Foreman was quoted in a Bloomberg article titled "U.S. Stocks Lose Momentum After S&P 500 Index Tops 2,000." Mr. Foreman commented on equity valuations amidst the recent market rally that propelled the Standard & Poor’s 500 Index (SPX) above a record 2,000, with gains in 10 of the past 13 days. “In the U.S., you’re seeing businesses do very well. We’re in a situation where there are still some macro risks, but they’re overwhelmed by the
micro, which is surprisingly good,” said Mr. Foreman. August 25, 2014
Kayne Anderson Rudnick was ranked #9 on Barron's 2014 list of "Top 100 Independent Financial Advisors." This recognition makes it two years in a row that KAR has been highlighted among the Top 10 in the country by Barron’s. To be considered for inclusion, wealth advisors were required to complete an extensive questionnaire regarding their practice. Barron's editors focused on the overall quality of the practice, employing a proprietary formula to screen and rank the candidates.
August 22, 2014
Kayne Anderson Rudnick CIO Doug Foreman was quoted in a CNBC report titled "Stocks End Mixed; Best Week in 4 Months for Dow, S&P." Mr. Foreman commented on speeches by European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen regarding stimulus for the euro-zone economy and slack in the U.S. labor market respectively.” I'm not worried about whether they raise rates in the first quarter, the second quarter or the third quarter. Am I going to sell Home Depot because of that? I don't really know how to invest on that. Companies in the U.S. are doing well. That's the bottom line, and that's why the market is up at all-time highs, despite all the hand wringing over macro events," said Mr. Foreman.
August 16, 2014
Managing Director of Kayne Anderson Rudnick Wealth Advisors, Spuds Powell, was highlighted in a Barron’s article titled “Spuds Powell: Master of Disaster.” The article focuses on the ability of KAR’s Wealth Advisors to play great defense during difficult markets. To maintain stability among
varying economic environments, our investment team focuses on quality companies that have clear competitive advantages and low levels debt. In terms of allocation, these high-quality companies provide important ballast to any investment portfolio, often with some exposure to alternative assets, which can serve as a helpful buffer against a downturn in stocks.
A comprehensive collection of instances in which Kayne Anderson Rudnick has been mentioned in various media sources is available on both our website (www.kayne.com) and our social media web pages. This brief is intended for informational purposes only and should not be considered a solicitation to purchase securities. Any recognition by third party sources or other publications should not be considered a recommendation. Past performance is no guarantee of future results.
August 1, 2014
In the August/September 2014 issue of Worth Magazine we addressed the question "Are international small-cap stocks an untapped opportunity?" Given the markets in which they operate, international small caps may offer greater opportunities for growth and pricing inefficiencies than those in domestic markets. One of the reasons for the strong returns is that international small-cap stocks present a large and less efficient opportunity set—fertile ground for investors looking to add value through bottom-up fundamental analysis.
June 26, 2014 Kayne Anderson Rudnick was named to the 2014 Financial Times Top 300 Registered Investment Advisers list, an esteemed group in which the average practice oversees more than $2.5 billion in AUM and serves 3,000+ clients. Financial Times considered applications from more than 2,000 independent RIA firms who had $300 million or more in assets.
June 25, 2014 Kayne Anderson Rudnick CIO Doug Foreman was quoted in a CNBC mid-day report titled “US Stocks Finish Higher; S&P 500 near Record Close.” Regarding data showing that the economy contracted 2.9 percent in the first quarter, Mr. Foreman said "GDP is obviously important, but by the time you get the final number, it's ancient history and the market has moved on…The GDP number was a little unsettling, but as unsettling as it is, corporate earnings did really well, and profit margins held in beautifully. In retrospect, it's actually pretty remarkable how well these companies did, but it helps explain why the bond market has been so strong.”
June 16, 2014 Kayne Anderson Rudnick Wealth Advisors appeared in the hard copy edition of The Wall Street Journal. In a section called “Wealth Management,” Spuds Powell CPWA® and Curt Biren CPWA® AIF® were featured as “Five Star Wealth Managers You Need to Know” in Southern California.
June 2, 2014 Kayne Anderson Rudnick was ranked #10 on list of “Largest fee-only RIAs” (ranked by total AUM).
June 2, 2014 Kayne Anderson Rudnick ranked #17 on list of “Biggest gainers,” comprised of largest fee-only RIAs ranked by percentage growth in total assets.
June 1, 2014 In the June/July 2014 issue of Worth Magazine, Kayne Anderson Rudnick addressed the question, "Is it Time to revisit my Estate Plan?" A solid estate plan can help you efficiently transfer assets to your loved ones and favorite charities in a way that properly reflects your values and goals. However, in order to deliver on this intended objective, the plan needs to be regularly reviewed as your life circumstances change and the applicable tax law evolves. May 28, 2014 Kayne Anderson Rudnick ranked #14 of “15 Fastest-Growing Fee-Only RIAs” (ranked by 3- year CAGR). May 14, 2014 Spuds Powell, CPWA® and Managing Director of Kayne Anderson Rudnick Wealth Advisors, filmed an interview with Barron's Associate Editor, Matt Barthel. Spuds discussed defensive investing and the practice of preserving clients’ wealth and generating income through master limited partnerships (MLPs), short-term bonds, and blue-chip stocks.
. April 15, 2014 Two of our Wealth Advisors were recognized as 2014 Five Star Wealth Managers as seen in the
January issue of Los Angeles Magazine. Spuds Powell, CPWA® and Curt Biren, CPWA®, AIF® were recognized in 2014 as multi-year winners having received the recognition for the past 4 years.
A comprehensive collection of instances in which Kayne Anderson Rudnick has been mentioned in various media sources is available on both our website (www.kayne.com) and our social media web pages. This brief is intended for informational purposes only and should not be considered a solicitation to purchase securities. Any recognition by third party sources or other publications should not be considered a recommendation. Past performance is no guarantee of future results.
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WGROWFour Emerging Market Opportunities; How to Buy a Ranch; The Eight Best Real Estate Investments Now
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CURATORMen’s Summer Fashion. Plus: From Thailand to Switzerland, Six Incredible Trips to Take This Year
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Kayne Anderson Rudnick Caleb “Spuds” Powell, CPWA®, Managing Director; Darnel Bentz, Senior Vice President; Curt Biren, CPWA®, AIF®, Senior Vice President; Thomas Connaghan, Senior Vice President; Diane Spirandelli, CFA®, Senior Vice President
Los Angeles—San Francisco, CA Leading Wealth Advisor
Alternative investments: Should they be part of my asset allocation? By Kayne Anderson Rudnick
Information expressed herein is strictly the opinion of Kayne Anderson Rudnick and is provided for discussion purposes only. This report should not be considered a recommendation or solicitation to purchase securities. Past performance is no guarantee of future results.
Alternative investments (known sim-ply as “alternatives”) are investment strategies outside of traditional stocks, bonds and cash. Some common exam-ples are private equity, venture capital, hedge funds, real estate, commodities and currencies. Less obvious examples are managed futures, private debt, deriv-atives and strategies such as hedging, short selling and arbitrage.
The popularity of alternatives has surged in the years following the 2008 financial crisis. Given the volatility in the stock market and the prospect of rising interest rates going forward, the traditional 65/35 allocation to stocks and bonds has felt less secure for many. Subsequently, investors have looked to further diversify their portfolios; and alternative investments provide a good solution, to potentially increase returns and/or decrease risk. (See chart.)
One reason for incorporating alter-natives into your investment strat-egy is to build a diversified portfolio whose more consistent return pattern will better withstand the fluctuations in market cycles. Alternatives help to achieve this goal primarily through risk reduction and the generation of strong returns that are often less correlated with traditional equity and bond mar-kets. Correlation refers to the degree to which investments fluctuate relative to one other. Positively-correlated assets move in the same direction. Alterna-tives, being less correlated to traditional markets, may exhibit returns that go up
when equity and/or bond markets go down, and vice-versa.
Alternatives also exhibit strong defensive characteristics despite the perception that they can be riskier assets. Referencing the concept of cor-relation again, the lower correlation of alternatives to traditional asset classes helps to reduce risk. Assuming equal levels of risk for an alternative versus a traditional asset class, the mere addi-tion of low correlated assets increases a portfolio’s diversification and, therefore, reduces its risk.
Further, from a statistical standpoint, alternatives often have much lower down-market capture ratios (a measure of an investment manager’s overall per-formance in down markets) than tradi-tional asset classes, meaning they often produce better returns when markets are declining.
Historically, alternatives have been
relatively difficult to access due to large investment requirements, strict prequalification rules, higher fees, lower liquidity levels, long lock-up periods for invested capital, poor transparency and difficult valuation. Also, though formerly available only to institutional investors, alternative investment strat-egies have become more accessible to the individual investor due to a prolif-eration of more liquid and tax-friendly alternative investment structures, such as REITs (real estate investment trusts) and MLPs (master limited partnerships), which can be easily accessed via ETFs (exchange-traded funds), actively-man-aged mutual funds or closed-end funds.
Because today’s complex markets require sophisticated investment tech-niques to help investors achieve their long-term goals, we believe alterna-tives can play a key role in a successful investment experience.
Stocks = S&P 500 Index, Bonds = Barclays Capital U.S. Aggregate Bond Index, Alternatives = CSFB Hedge Fund IndexData was obtained from FactSet Research Systems and is assumed to be reliable. Past performance is no guarantee of future results.
15 YEARS ENDING DECEMBER 31, 2013
StocksBonds
StocksBondsAlternatives
35%
65%StocksBonds
StocksBondsAlternatives
20%
50%30%
65% Stocks/35% Bonds Portfolio With 20% Alternatives AllocationAnnualized Return 5.45% 5.73%Annualized Volatility 9.99% 8.51%
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How to reach Kayne Anderson Rudnick
We are oriented toward quality—in our investments, in our service and in our business practices. To learn more, please contact us at 800.231.7414.
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Kayne Anderson Rudnick 1800 Avenue of the Stars, 2nd Floor, Los Angeles, CA 90067 800.231.7414 580 California Street, Suite 1750, San Francisco, CA 94104
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Assets Under Management $9 billion (as of 12/31/13)
Largest Client Net Worth $500 million+
Minimum Fee for Initial Meeting None required
Minimum Net Worth Requirement $1 million
Professional Services Provided Investment advisory and money management services
Compensation Method Asset-based fee (investment services)
Primary Custodian for Investor Assets Fidelity Investments
Financial Services Experience Powell, 20 years; Bentz, 13 years; Biren, 27 years; Connaghan, 16 years; Spirandelli, 42 years
Email [email protected] [email protected] [email protected] [email protected] [email protected]
Website www.kayne.com
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relatively difficult to access due to large investment requirements, strict prequalification rules, higher fees, lower liquidity levels, long lock-up periods for invested capital, poor transparency and difficult valuation. Also, though formerly available only to institutional investors, alternative investment strat-egies have become more accessible to the individual investor due to a prolif-eration of more liquid and tax-friendly alternative investment structures, such as REITs (real estate investment trusts) and MLPs (master limited partnerships), which can be easily accessed via ETFs (exchange-traded funds), actively-man-aged mutual funds or closed-end funds.
Because today’s complex markets require sophisticated investment tech-niques to help investors achieve their long-term goals, we believe alterna-tives can play a key role in a successful investment experience.
About Kayne Anderson Rudnick Ranked No. 5 on the Barron’s list of 2013 Top Independent Financial Advisors, Kayne Anderson Rudnick is a boutique investment advisory firm founded in 1984 to manage capital for its founders, including John Anderson (a Forbes 400 billionaire and the benefactor of UCLA’s Anderson School of Management). With offices in Los Angeles and San Francisco, the company manages assets for both high net worth individuals and institutions. Its advisors boast an average client relationship length of 11 years and a retention rate of over 95 percent, thanks to outstanding client service and personalized investment strategies designed around clients’ unique circumstances and objectives. Disciplined risk management and diversification are key components in helping clients achieve their goals. Accordingly, the company’s comprehensive platform offers proprietary investment strategies and a range of carefully selected, externally managed investment solutions. With 30 years of experience blending traditional and alternative investments, Kayne Anderson Rudnick is known for a commitment to high-quality business practices, investment strategies and wealth solutions.
“Given the volatility in the stock market and the prospect of rising interest rates going forward, the traditional 65/35 allocation to stocks and bonds has felt less secure for many.” —Kayne Anderson Rudnick
Front row: Diane Spirandelli, Caleb “Spuds” Powell; back row, left to right: Thomas Connaghan, Darnel Bentz; not pictured: Curt Biren
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the evolution of financial intelligence
R E P R I N T E D F R O M
®
Caleb “Spuds” Powell, CPWA® Managing Director
Darnel Bentz Senior Vice President
Curt Biren Senior Vice President
Thomas Connaghan Senior Vice President
Diane Spirandelli, CFA® Senior Vice President
Kayne Anderson Rudnick 1800 Avenue of the Stars, 2nd Floor
Los Angeles, CA 90067Tel. 800.231.7414
909 Montgomery Street, Suite 500San Francisco, CA 94133
[email protected]@kayne.com
[email protected]@kayne.com
Kayne Anderson Rudnick is featured in Worth® 2014 Leading Wealth Advisors™, a special section in every edition of Worth® magazine. All persons and firms appearing in this section have completed questionnaires, have been vetted by an advisory group following submission by Worth®, and thereafter paid the standard fees to Worth® to be featured in this section. The information contained herein is for informational purposes, and although the list of advisors presented in this section is drawn from sources believed to be reliable and independently reviewed, the accuracy or completeness of this information is not guaranteed. No person or firm listed in this section should be construed as an endorsement by Worth®, and Worth® will not be responsible for the performance, acts or omissions of any such advisor. It should not be assumed that the past performance of any advisors featured in this special section will equal or be an indicator of future performance. Worth®, a Sandow Media publication, is a financial publisher and does not recommend or endorse investment, legal or tax advisors, investment strategies or particular investments. Those seeking specific investment advice should consider a qualified and licensed investment professional. Worth® is a registered trademark of Sandow Media LLC. See “About Us” for additional program details at http://www.worth.com/index.php/about-worth.