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July 16, 2013 at 09:19 PM
Jim Corbeau has been using foreign investments as part of his clients’ portfolios ever since he founded Maas Capital Advisors, LLC in Portland, Ore. in 2000. He has a different outlook on the makeup of a portfolio than most of his peers, perhaps because his background gave him a different view of the investing world.
Corbeau didn’t begin his career in the financial arena as an advisor in the U.S. Instead, for more than 10 years he was an investment banker in Europe, where he worked with companies and with high-net-worth investors. The experience made him, he says, “acutely aware that there was a world outside the U.S.”
When he left Europe behind to start his own RIA firm at home, he said, “I didn’t have the bias that if it wasn’t in the S&P 500, it didn’t exist. The fact that I wasn’t in the U.S. during the ’90s and the dotcom and tech run-up probably gave me a different perspective. From day one, we used 70% U.S. and 30% international [in portfolios]. It should have been tilted more toward foreign, but back then even that was fairly exotic,” he said.
What was exotic in 2000 would become even more so in 2005, when “we advised our clients that we would be changing the mix from 70/30 to 50% U.S. and 50% international, to reflect the fact that the U.S. was a smaller piece of a growing global pie,” Corbeau said. “At the same time, for larger client portfolios we introduced an exposure to emerging markets equities, as a carve-out of the overall 50% international,” he said.
But Corbeau wasn’t finished yet with adjusting client portfolios to reflect a thoroughly global approach. “Later, we introduced international real estate as another carve-out. We also use international bonds as a part of our fixed income allocation,” he said.
How did clients react to such a radical move? Corbeau said they took the changes well. “I think that from our perspective, and just from our experience, clients tend to say, ‘If that’s what you think is best, that’s what we pay you for.’” While most are content to leave it in the firm’s hands, Corbeau said that “there are some who by virtue of their own affinity for investing get a little more involved—Japan or emerging markets, [for instance].”
