There was news Tuesday that a one-time dividend investor favorite Seadrill (NYSE: SDRL) was warning shareholders that they should expect to “receive minimal recovery for their existing shares” as concerns have escalated to whether it can continue as a going concern.
When assessing a portfolio and determining their asset class mix, investors often allocate large portion to equities as this is believed to have a much better longer-term investment return profile than “bonds,” while “bonds” are considered less risky and offer a diversification benefit to a portfolio.
So proclaimed Bloomberg in an interesting column about investors losing interest in hedge funds due to poor performance, or perceived poor performance, and high fees. I won’t defend the fees but will point out that fewer and fewer hedge fund investors pay the full 2 and 20 (2% management fee with 20% of the gain) in the last few years.
For those concerned about interest rates rising, turning to the floating rate loan market may seem like it could be a great alternative. Over the past few weeks, as we have seen the expectation for higher rates firmly take hold and a spike in Treasury yields, floating rate loans (also called leveraged loans) are once again becoming a popular trade.
Over the last few weeks I’ve fielded several financial related questions (more personal finance than actual investing) from some younger people in my life (mostly nephews). This is a great reminder of a point I have made quite a few times over the years which is that even if you’re not an advisor...
A day or two after the election someone (not a Trump fan) asked me about selling out of the market as they apparently thought the market would go down. This is a great example of something that repeats over and over in the market and the thought process of market participants.
A basic stock and bond portfolio is a great starting point for building an effective portfolio. Exposure to things like factors and alternative strategies, when implemented correctly, will enhance a basic stock and bond portfolio, not attempt to replace it.
Be it how hedge fund returns have been struggling over the past year or how index funds have been gaining some traction, there has seemed to be much in the financial media over the past few weeks about the challenges facing active management.
With all of the talk of the Federal Reserve taking action and raising rates in the next couple months, investors naturally are considering how they position their portfolios.