Why Be the Same As Everybody Else?
The differences are what make life interesting. Wouldn’t you agree?
At Clear Direction Investments, diversification is something we take very seriously. That’s why we’re into investment instruments that zig when the market zags.
With our transition to Concorde Investment Services, we have expanded the opportunity set to include asset classes such as real estate, private equity, and debt, all researched and selected diligently by a nationally known team of professionals that we have allied with.
One of the key reasons for the shift to Concorde Investment Services was the company’s alternative investments capabilities. This month, we spoke with Concorde to get a sense of what their process entails and how it may benefit our clients.
Clear Direction: Tell us about how you select a fund to be on the platform?
Concorde: We conduct thorough due diligence for every product that goes onto our platform. Our goal is to make sure that the offering is geared to make money with reasonable risk and that our platform presents a diversity of offerings.
By diversity we mean a range of options across asset classes, geographies, and strategies. For example, in real estate we look at multifamily housing, hospitality, and storage deals.
The advisor then has a full suite of choices to pick from. He or she determines the allocation and then picks the funds to fulfill that allocation depending on the unique risk and return preferences of the client.
Clear Direction: How do you really tell a good fund sponsor from a bad one?
Concorde: In the alternatives space there’s a lot of good deals and bad deals, bad sponsors. It’s not always easy to tell them apart because the bad fund sponsors are often the most likeable, most charismatic characters around.
Everyone who calls us has the best deal in the world (supposedly). Nobody calls you up and says, “I’ve got a poorly returning deal for you, will you come look at it?”
So we really have to take a hard look at what the fund sponsor can offer that actually backs up what they’re telling us. It’s not just about vetting the fund but also vetting people. We look for people who are going to do right by the clients, even when the times get tough. We look for people that won’t come back and embarrass us later down the road. We look at the sponsors and their track records, their financial backing, and ask do they have good processes and procedures in place?
Clear Direction: What if visibility is limited?
Concorde: We always proceed very carefully in such situations. If the sponsor is trying to raise money and you don’t know what they are going to buy in a particular fund, there’s no way to get a sense of their track record except to go back and analyze deals they’ve done before.
When the assets are already identified, sometimes we do the tour and sometimes we don’t. You can do so much now with technologies such as Google Street View. Our team is very experienced and we know the markets and sub-markets; so most of the time we don’t have to go onsite. But if there’s something that is totally new or just doesn’t feel right then we’ll do a property tour.
Clear Direction: What about deals that are already approved?
Concorde: We continue to monitor the funds that are on our platform, looking at quarterly financials and evaluating what they are buying to detect any style drift that may be going on.There are times when we’ve taken deals off our platform because something changed, we didn’t like what they are buying or they weren’t executing strongly. We have that attitude that we would rather identify problems quickly, learn from it and move on. Better to resolve the issue faster than drag it out.
Thanks for reading and please reach out to us with any questions. Remember, our role is to be your guide through the ever-changing financial world and to make sure you’re following a clear direction!
-Randy Stoltz, President
This is for informational purposes only and does not constitute an offer to buy or sell an investment. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years, and reasonably expects the same for the current year) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware.