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Price-Insensitive Sellers
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines the impact on a range of global asset classes of "price-insensitive market participants" who may "buy assets for reasons other than the expected returns those assets may deliver."
Are Managed-Payout Funds Better than Annuities?
by Joe Tomlinson,
Managed-payout funds promise to meet retirees’ need for sustainable lifetime income without relying on annuities. To see whether this promise can be fulfilled, I’ll answer three questions: What’s the best design for such funds? How do they compare to annuities? Can retirees do even better by combining managed-payout funds and annuities?
Screens vs. Windows: Why Choosing a Fund Manager Requires Both
by Tracy Fielder of Invesco Blog,
Choosing the right fund manager is an important decision for investors, and many rely on data screens to help them sift through mountains of performance numbers. But screens alone don’t tell you the whole story. To get a clear view of how a fund might fit into your portfolio, you also need a window into the mind of the manager.
Does Your Muni Bond Fund Own Puerto Rico’s Bad Debt?
While the media and investors are focused on Greece, Puerto Rico is having a debt meltdown of its own. The U.S. territory owes lenders over $70 billion, $5.4 billion of which is due in the next 12 months. But without some form of debt restructuring, says Governor Alejandro García Padilla, it will be unable to meet its obligations. Countless municipal bond fund investors—many of them unaware they have exposure to the Caribbean island—could be affected.
Don’t Let the Noise Keep You Up at Night
Three subjects have concerned the markets recently: a Greek debt default and possible exit from the European Union (Grexit), the Federal Reserve’s (the Fed’s) normalization of interest rate policy and potential bond market illiquidity following a rise in interest rates. The first two are binary outcomes, which have been debated in the marketplace for years. While discussing these possible outcomes ad nauseam may be a palliative to some, in our view it doesn’t really provide much meaningful, incremental information until more definitive actions are taken.
Tocqueville Gold Strategy Investor Letter: Q2 2015
What is required to restore investor interest in gold? In our opinion, a prolonged bout of financial-market adversity would suffice. After all, the cornerstone of coordinated central-bank policy since 2008 has been the levitation of financial assets via Zero Interest-Rate Policy (ZIRP) and Quantitative Easing (QE) by forcing investors into risky assets. We believe that nothing would serve better to undermine confidence in central bankers than a bear market in bonds and equities. The roof above the dollar gold price has been built brick by brick from confidence in central bankers.
Are MLPs Waiting for Godot?
Like the absurdist play where two characters Vladimir and Estragon wait for a mysterious Godot who never shows up, investors in MLPs continue to wait for definitive answers to the "big questions" facing MLPs: when will interest rates rise and what will happen with future oil production and prices?
Summer Quarterly Commentary
Greece is much in the headlines again. As we stated in our Spring 2013 letter, “The European debt crisis will not be over until either: 1) the debt goes away (read: default or substantial inflation) or 2) these governments start producing actual surpluses with which to pay the debt down.” So far, every subsequent deal has failed to produce either of these two scenarios, and so each time news media builds up another weekend summit or referendum, the running joke around here is, “Don’t worry, it will all be resolved this weekend.”
July 2015 Economic Update
The U.S. economy continues to plod its way forward at a slow and steady pace. Short-term setbacks seem to be the norm, but a general sense of an improving economy is seen through many sectors. The focus on month-to-month indicators has been de-emphasized recently by the scale of global headlines that seems to be driving markets and investor sentiment. Having a steady economic backdrop is very helpful during a period of global challenges.
Bond Market Liquidity: Don’t Confuse Investment Risk With Systemic Risk
by Douglas Hodge of PIMCO,
It is not surprising that the subject of bond market liquidity has come under increasing focus among regulators, investors and the media. While banks are now better capitalized, the combination of post-crisis capital and liquidity regulations and a lower return environment has made them less able and less inclined to function as market makers. Although bank-oriented regulation has made the system more resilient and less levered, it has also had the practical effect of reducing liquidity in markets that have historically relied on banks to support trading, such as in the corporate bond market.
Do The Gabelli Funds Add Value for Investors?
by Larry Swedroe,
Mario Gabelli is one of the highest paid executives in America, having earned $88.5 million in 2014 – more than the leaders of all other publicly traded asset-management firms. But have the investors in his mutual funds been as richly compensated when compared to what they would have earned in comparable, passively managed funds?
The Opportunity in Municipal Closed-End Funds The Value in the 9th Inning of the Great Bond Rally
by Michael Lebowitz,
For the last five years, bond market experts have unfailingly and wrongly predicted a rise in interest rates. If the current rate-hike fears prove unfounded again, municipal-backed closed-end funds (M-CEFs) is an asset subclass likely to perform well. Here are eight such funds to consider.
On My Radar: Black Widow Returns
“When it does happen, it’s usually not the first-derivative event that people are caught off guard by. They’re caught off guard by the second, third and fourth derivative events. It’s ‘Oh yeah, when interest rates go up, that happens.”– Gary Cohn, Goldman Sachs’ President and COO
How Much Bond Duration Could You Endure?
by Chuck Carnevale of F.A.S.T. Graphs,
In my most recent article titled “Designing a Retirement Portfolio That’s Just Right for You” I opined that a retirement portfolio should be designed to meet the individual investor’s specific goals, objectives and risk tolerances. I also suggested that the highest total return is not always the best approach because if the investor needs income to live off of, a focus on a consistent rising income stream makes more sense.
Gundlach v. Yellen: Will the Fed Raise Rates?
by Robert Huebscher,
On Friday, Fed Chairwoman Janet Yellen said that the nine-year wait for an interest-rate increase would likely end this year. Three days earlier, though, Jeffrey Gundlach said that a rate increase this year is unlikely, given the mix of bad news and uncertainty in the world markets. Which view prevails will be the focus of bond market participants in the months ahead.
How to Understand Neuroscience to Gather More Assets
by Daniel Solin,
Brokers are largely successful in selling inferior or conflicted services because they have superior sales skills. Bridge this gap and level the playing field by understanding the role that neuroscience plays in the decision-making process.
Millennial Prosperity
Many media organizations and smart money managers are postulating that today’s 22-35 year old age group (millennials) might be the first generation since World War II to not marry, have children, buy cars and buy houses at high enough percentages to help us fully recover from the financial meltdown of 2007-09.
Designing a Retirement Portfolio That’s Just Right For You
by Chuck Carnevale of F.A.S.T. Graphs,
No one knows your own personal financial situation better than you do. Every individual possesses their own unique investment goals, objectives, needs and risk tolerances. At first glance this may seem simple and straightforward to the point of stating the obvious. However, I contend that the reality that individuals have different financial situations, goals and objectives is profoundly important as it relates to designing an appropriate retirement investment portfolio.
CIO Newsletter
by Ritesh Jain of Tata Asset Management,
In this edition of my newsletter, I have tried to address one of the most common questions that investors have been asking me these days; what to make of the noise surrounding us and how India is placed to weather this volatility. Let me tell you, it's not going to be a smooth ride. In the last 6 months, there has been too much going on worldwide.
A Greek Play
The second quarter of 2015 experienced heightened bond market volatility in anticipation of the Fed’s first rate increase as well as international equity volatility involving Greek debt and Chinese equities. Despite whipsawed volatility, the major domestic and international equity indices ended close to where they started.
The Best Way to Judge Past Performance: Part Two
by Chuck Carnevale of F.A.S.T. Graphs,
On virtually every financial website on the planet there is a never-ending daily stream of stock tips and recommendations. Consequently, the investing public is literally flooded with information and advice regarding what stock to buy today or not to buy. Some of what is offered is supported by factual information and logic, but unfortunately, much of what is offered is merely based on the opinion of the author. This presents quite a challenge to the prudent prospective investor seeking sound advice or guidance.
Investing in Lake Wobegon: Where all the returns are above average
The implicit assumption of many funds is that returns will be attractive over the investor's time horizon. Increasingly, this assumption appears to be invalid and many long term investors would be better served by taking an "absolute return" approach to investing.
The Whole Story: Factors + Asset Classes
by Jason Hsu of Research Affiliates,
Every year we invite some of the investment industry’s most creative thinkers to speak about their work at the Research Affiliates’ Advisory Panel conference. Along with Nobel laureates Vernon Smith and Harry Markowitz, the speakers at our 14th annual meeting included Campbell Harvey, Richard Roll, Andrew Karolyi, Bradford Cornell, Andrew Ang, Charles Gave, Tim Jenkinson, and our very own Rob Arnott. The richness of the speakers’ presentations beggars any attempt to summarize them; I’ll limit myself to the points I found most intriguing and illuminating.
More Volatility: A Positive Environment for Active Managers
Dating from the year-to-date low for the 10-Year Treasury on January 30 through the end of the first half, we have observed promising signs that the market may be taking greater strides toward normalization. CEO Chuck Royce and Co-CIO Francis Gannon discuss how higher rates might benefit bottom-up stock pickers, the potential for quality companies to regain leadership as volatility increases, the possible consequences of global economic recovery for both domestic and non-U.S. small-cap stocks, and the favorable landscape for consumers and its effect on our portfolio positioning.
Can American Funds Sustain Its Outperformance?
by Larry Swedroe,
Among actively managed funds, American Funds has a reputation for providing investor-friendly, low-cost products with sustained records of outperformance. But has it outperformed comparable funds from Vanguard and Dimensional Fund Advisors (DFA)? If so, should investors expect its funds to maintain their edge?
It Never Rains in California
Ted Cruz recently suggested praying for rain in Texas, and apparently someone did a few weeks ago, producing a deluge resembling a modern day Noah’s Ark of sorts. California’s Governor Brown on the other hand, has taken a more secular approach. He believes that Mammon, not God, bears responsibility for the Golden State’s record drought and that I, we, all of us simple folk should cut back water usage by a minimum of 25%.
Don’t be Surprised - Speech to CFA Society of Chicago
by Stephen Romick of FPA Funds,
I’m reminded of a gentleman who discovers a genie in a bottle. Granted one wish only – apparently even genies have pricing power – the man asks for peace in the Middle East. The genie backs away and says, “That’s way too difficult. Give me something easier.” The man ponders his options and asks the genie instead, to help him pick a good mutual fund. The genie quickly responds, “Let me get to work on the Middle East.”
Global Investing is Changing
by Richard Bernstein of Eaton Vance,
International investing was easy for U.S.-based investors for many years because the U.S. dollar was either declining in value or was stable. U.S. dollar-based investors’ non-US equity and fixed-income returns were generally enhanced by the falling dollar so that U.S. investors actually tended to outperform the local currency benchmarks. Of course, investment managers took credit for the resulting “alpha” despite that out performance was more likely attributable to currency than to asset selection.
Gold and Health Care Stocks Get a Clean Bill of Health
Even though the Federal Reserve announced this week that it would wait a little longer to raise rates, spooked investors fled to gold bullion, helping to drive prices above $1,200 an ounce. It was the greatest single-session surge by percentage in nearly a month and a half for the yellow metal, widely seen as a safe-haven investment. As I told MarketWatch yesterday, $1,200 is an important threshold for gold miners because it helps increase profitability and spur production.
Concerned About Rising Interest Rates? Consider These Four Alternative Investments
by Walter Davis of Invesco Blog,
As I travel across the country meeting with financial advisors and their clients, a common concern I hear voiced is “how can I position my portfolio for when the inevitable happens and interest rates start to rise?” In response, I state that certain types of alternative investments are well suited to help prepare portfolios for rising interest rates in the future, while also potentially adding value in the present.
Managing Risk by Investing in Dividend-Paying Stocks
by The Royce Funds,
Small-cap is an asset class that has historically been associated with increased volatility. We have always believed that dividends, plentiful in the small-cap space, can help mitigate some of that risk. But what are we looking for in the dividend-paying companies in which we invest? Portfolio Manager Jay Kaplan and Co-CIO Francis Gannon discuss.
Rate Hikes: Investor Risk Perceptions and Historical Context
During a recent quarterly webcast for financial advisors, we asked the audience about their clients’ biggest concerns for the remainder of 2015. The four options were: - Losing money on their equity allocations; - Not earning enough income; - Not keeping up with the stock market; - Losing money on their fixed income allocations. Of these, “losing money on their equity allocations” was by far the most popular response, at just under 40%. In our view, bond market risks are greater than many people realize.
Results 2,551–2,600
of 3,362 found.
