Wealthy Investors Demanding Transparency: Smith

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Nov. 11 (Bloomberg) -- Henley Smith, CIO at Commonwealth Asset Management, discusses the top concerns of his clients and what he sees from the next generation of investors. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

Investment officer at commonwealth.

What are your clients worried about?

Transparency.

They want to know what they invest in is what they invest in . they can wrap their hand around it and they can understand it.

You are seeing a lot of wealthy individuals kind of move away from the hedge fund space because they want to get under the hood.

They want to on tangible, liquid assets?

Do they care about fees?

That is a big driver.

Taxes are a big driver.

I think you are seeing much more direct investing.

Is your worst nightmare the next 90 days?

You are a bond guy.

What is going to be a push from the haves over the holidays into next year?

More equities or stay with bonds?

I think the bonds are played out right now.

We have had a 30-year run in bonds and that is coming to a close.

We are going to be look at february.

We going to go back to the public snafus again?

Equities will continue to have demographically -- naturally have a better flow.

If more retailers start to get in the market now, is that a sign that the pros should get out?

Orca this time be different?

When retail moves you move the other way.

We have been dealing with so much uncertainty the last couple of years.

If there is a big followthrough from what we have seen over the last couple of days, i think that will be a big thing.

I think you are starting to see next generational type of investors get back into the stock market and that would be a big positive thing.

Matt levine, henley was talking about hedge funds, about people shying away from that.

Their model was not -- steve: is potentially out of the game for outside investors.

What does that mean for hedge funds overall?

They charge outsized fees because they have outsized returns.

One of the questions that arises from sec capital -- how much of the performance was illegal activity?

Is the model broken?

Is the high-performance coming from places that cannot really come from?

In terms of the model and getting ready for 2014, i would go to henley smith.

Next-generation a, that is an emotional phrase.

What is going to be the shift about the next generation of investors?

The first generation is all about wealth creation.

The next generation is about wealth preservation.

The one after that is wealth representation.

I got a bell.

What that means is that their dollars are doing the right thing.

Impact investing.

Away from social responsibility.

They want to know that their dollars are making a return, but that they are doing good.

That is the trend we are starting to see.

This is social responsibility?

The conferences i have been in in the last couple of weeks have been focusing in on impact investing from educational, make a statement, represent our dollars and do well.

How do you do that in the fixed income market?

Smart investing and smart yields.

Erect investing like loans.

-- direct investing like loans.

I don't care about social.

I just want to make money.

This is a pie chart of 2013. i don't like pie charts.

This one screams smart.

39% cash.

We grew up in a time where having 10% cash -- you just didn't do that.

39% cash?

More alternatives.

That is what i look at.

You have to go like this.

Don't contort yourself.

Three 2008 -- pre-2008, now all of this uncertainty.

Cash has been a much higher allocation.

I think that will stay with us.

Henley smith, here on your money.

Thank you.

This text has been automatically generated. It may not be 100% accurate.

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