A Freezing Nation: Tips to Prepare Seniors
"Oh baby, it's cold outside," suitable phrase for the season and fitting for the extreme freezes we're experiencing across the nation.
Younger people see snow and ice as an amusement and a way to have fun, but for older adults, the cold brings hazards and risks of falls and hypothermia. There are no advantages in that.
That's why it's important for seniors to prepare properly and make sure your home and car are ready for winter's deceptive killers. Here are the predominant ones:
- Wind - winter brings high winds that can create blizzard conditions with blinding, wind-driven snow, drifting and dangerous wind chills. These winds bring down trees and utility poles.
- Snow - accumulations can immobilize a region and paralyze a city, strand motorists, and interrupt emergency services.
- Ice - massive build-up brings down trees, utility poles and lines, and communication towers. Power is disrupted for days while companies repair the damage.
- Cold - drastic drops in temperatures frequently accompany winter storms. Infants and the elderly are most susceptible to prolonged exposure, which causes life-threatening conditions like hypothermia. Below freezing temperatures damages vegetation and cause pipes to freeze.
Ways to take care of yourself
- Healthy foods - produce is out of season and costly. Check out the food market's frozen veggies department. Be sure opt for the brands with less sodium, and select fruits and vegetables such as pomegranates, cranberries, citrus fruits, grapes, and root vegetables. Support the immune system with Vitamin C and eat foods rich in zinc, such as fish, poultry, and eggs.
- Stay fit - if your doctor permits and you are able, get outside and enjoy your favorite activities. But dress in layers and wear a hat and gloves. Make sure you remember to apply sunscreen to your exposed skin and to wear insulated socks and proper shoes.
- Soak up the sun - the benefits of Vitamin D plays a big part in battling the blues. Fresh air and natural light are key to fighting depression. If it's freezing, open the blinds and sit by the window. Sunshine increases the body's energy level and outlook.
- Car safety - maintain your vehicle by testing the battery voltage, the lights, and checking the coolant levels. Check the tire pressure, and fill up the gas and windshield fluid tanks. And if you're on the road a lot, purchase a survival kit that includes a blanket, a first-aid kit, a knife, a flashlight, jumper cables and a cell phone charger that plugs in the cigarette lighter.
- Keep the house warm - an older body has a harder time maintaining it's temperature, and since most seniors have a limited income, they usually turn down the heat setting. However, know that hypothermia is a significant risk, and over 13,000 hypothermia deaths occurred between 2003 and 2013 in the United States. So, set your thermostats to at least 68 degrees and wear warm clothing. Check with the utility company to see if you qualify for assistance.
Alternative Beta Strategies: Alpha/Beta Separation Comes to Hedge Funds
Written by: Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies, J.P. Morgan Asset Management
A quiet revolution is taking place in the alternatives world. The idea of alpha/beta separation has finally made its way from traditional to alternative investing. This development brings with it a more transparent, liquid and cost-effective approach to accessing the “alternative beta” component of hedge fund return and a new means for benchmarking hedge fund managers.
The good news for investors is that the separation of hedge fund return into its components—rules-based alternative beta and active manager alpha—has the potential to shift investing as we know it. These advancements could democratize hedge funds and, at long last, make what are essentially hedge fund strategies available to all investors—even those who aren’t willing to hand over the hefty fees often associated with hedge fund investing.
A benchmark for alternatives
With respect to traditional equity investing, we have long accepted the idea that there is a market return, or beta—but this hasn’t always been the case. Investors used to assume that to make money in the stock markets, one needed to buy the right stocks and avoid the wrong ones. The idea of a market return independent of skilled stock selection seemed ridiculous to most market participants. Yet today, we would never invest in an active manager’s strategy without benchmarking it against its respective beta.
Interestingly, hedge fund managers have been held to a different standard. Investors have been much more willing to accept the notion that hedge fund strategy returns are pure alpha, and that their investment returns are based entirely on the skill of the fund manager. That notion explains why investors have been willing to accept a “two and twenty” fee structure just to access what has been perceived as one of the most sophisticated and powerful investment vehicles available.
In thinking about the concept of beta, consider its precise definition—the return achievable by taking on a systematic exposure to an economically compensated risk. In traditional long only equity investing, the traditional market beta has been further refined as a number of other risks have been identified that are commonly referred to as “strategic beta.” These include factors such as value, momentum, quality and size. But no one ever said that these risk factors must be long-only.
Over the past decade, as more hedge fund data became available, academics began to disaggregate hedge fund return into two components: compensation for a systematic exposure to a long/short type of risk (alternative beta), and an unexplained “manager alpha.” What they found is that a significant portion of hedge fund return can be attributed to alternative beta. That fact has turned the tables on how we look at hedge fund return. With the introduction of the alternative beta concept, hedge fund managers will have to state their results, not just in terms of total return, but also as excess return over an alternative beta benchmark.
Merger arbitrage—an alternative beta example
The merger arbitrage hedge fund style can be used to illustrate the alternative beta concept. In the case of merger arbitrage, the beta strategy would be the systematic process of going long every target company, while shorting its acquirer. There is an inherent return to this strategy because the target stock price typically does not immediately rise to the offer price upon the deal’s announcement. This creates an opportunity to purchase the stock at a discount prior to the deal’s completion. The premium that remains is compensation to the investor for bearing the risk that the deal may fail.
Active merger arbitrage managers can add value by choosing to invest in some deals while avoiding others. Therefore, their benchmark should be the “enter every deal” strategy, not cash. In fact, the beta strategy explains the majority of the return to the average merger arbitrage hedge fund. And it doesn’t stop there. Other hedge fund styles that can be explained using alternative beta include equity long/short, global macro, and event driven. Note that the beta strategy invests in the same securities, using the same long/short techniques as the hedge fund strategy. The difference is that the beta strategy is a rules-based version that can become the benchmark for the hedge fund strategy. After all, if a hedge fund strategy cannot beat its respective rules-based benchmark (net of fees), an investor may be wiser to stick to the beta strategy.
Implications for investors
What does all this mean for the end investor? Hedge funds have traditionally been the domain of sophisticated investors willing to pay high fees and sacrifice liquidity. Alpha/beta separation in the hedge fund world means that investors can finally choose whether to buy the active version of the hedge fund strategy or opt for the passive (beta) version. Hedge fund strategies can be effective portfolio diversifiers. Now, through alternative beta, virtually all investors can access what are essentially hedge fund strategies in a low cost, liquid, and fully transparent form. For investors who haven’t had prior access to hedge funds, this could be welcome news. Not only can investors look at an active hedge fund manager’s strategy and determine how it has done compared to the systematic beta equivalent, they can also invest in ETFs that encapsulate these systematic strategies.
When looking at one’s traditional balanced portfolio today, there are plenty of questions around whether the fixed income portion will achieve the same level of diversification it has provided in the past. After all, with yields still low, there is little income return. Additionally, the capital gains that came from interest rate declines are likely to reverse. With fixed income unlikely to adequately fulfill its traditional role in portfolios, there is a need to find an alternative source of diversification. This is where alternative strategies may help. For investors seeking to access diversifying strategies in liquid and low-cost vehicles, alternative beta strategies in ETF form are one option.
Looking for an alternative to enhance diversification in your portfolio?
For investors looking to further diversify their overall portfolio, JPMorgan Diversified Alternatives ETF (JPHF) seeks to increase diversification and reduce overall portfolio volatility through direct, diversified exposure to hedge fund strategies using a bottom-up, rules-based approach.
Learn more about JPHF and J.P. Morgan’s suite of ETFs here.
Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to obtain a prospectus. Carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read them carefully before investing.
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