So here's the scenario...I have a family friend that is a board member at a fairly large condo/housing association. They have about 2.5 million in cash which is supposed to be used for annual capital expenditures/maintenance/etc. Normally, they keep around 3-4 years worth of these expenses in cash due to issues that arose during the market crash years ago almost depleting their reserves. For the 10-15% that aren't going to be in this reserve account, they want to invest to gain some capital appreciation.

My question in, can they go to a money manager with say 300-400k, give them a IPS basically saying that they want to invest in high rated securities? Would a money manager even accept an account that isn't exactly a large amount of money? Any suggestions with how they should handle this situation?

There are a bunch of other board members that savvy themselves investors that want to invest in leveraged etf's, commodities funds, and other ridiculously risky investments, but the point of this investment is to gain a little risk and capital appreciation potential...not make a ridiculous amount of money.

In any case, the purpose is to limit their personal liability and entrust someone to handle this relatively small amount of money...any thoughts, suggestions, or advice is appreciated. Thanks

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Posted by matthew25

Member since Jun 2012

9425 posts

Posted on 6/15/12 at 7:46 pm to GregYoureMyBoyBlue

Go see Morgan Stanley Smith Barney or Raymond James and say we've got 400K (and maybe a little more) to invest at moderate risk.

Ask them for their porposed portfolio and how much are the fees. Let them know you are shopping around.

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Posted by foshizzle

Washington DC metro

Member since Mar 2008

40599 posts

Posted on 6/15/12 at 9:37 pm to GregYoureMyBoyBlue

quote:
leveraged etf's, commodities funds, and other ridiculously risky investments

A commodities index may not be risky if you just use it as a hedge. I have a little bit myself. But it sounds like the board members fancy themselves as able to beat the market whenever they feel like it.

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Posted by NC_Tigah

Carolinas

Member since Sep 2003

123887 posts

Posted on 6/15/12 at 9:51 pm to GregYoureMyBoyBlue

quote:
can they go to a money manager with say 300-400k, give them a IPS basically saying that they want to invest in high rated securities? Would a money manager even accept an account that isn't exactly a large amount of money?

Yes/Yes.

quote:
There are a bunch of other board members that savvy themselves investors that want to invest in leveraged etf's, commodities funds, and other ridiculously risky investments

Yep. Different approach. There's a fellow named Rivers they might hook up with.

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Posted by matthew25

Member since Jun 2012

9425 posts

Posted on 6/16/12 at 12:08 am to NC_Tigah

I forgot to add: your colleagues may want to consult with the London Whale, or even Bernie.

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Posted by BennyAndTheInkJets

Middle of a layover

Member since Nov 2010

5600 posts

Posted on 6/16/12 at 8:22 am to GregYoureMyBoyBlue

300-400k isn't a large amount so I'm not sure what asset managers will take it, maybe MS-AM or JPM-AM. Not because most people turn their noses up to that money it's just hard to diversify across securities in a separate account with only 400k. Your best bet is to invest in an IGC mutual fund from an asset manager and look for your fee cutoff right around 50 basis points. It shouldn't be too hard to find a fund like that with around a 5% historical annual return and around 50 basis points of historical annual alpha.

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