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Outrunning the Bear: An Active Managers Survival Guide
Two long-time friends go up in the mountains on a hunting trip. At 4:30 A.M. of the second day, one of the men wakes up at one end of the tent to find his buddy dressing and putting on his running shoes at the other end. He asks him what he is doing. His friend says, There is a bear outside our tent. The other guy exclaims, You cant outrun a bear! His friend replies, I dont have to outrun the bear, I just have to outrun you.
Trick or Treat? Slow Global Growth Hits Cyclical Sectors Hardest
by Francis Gannon of The Royce Funds,
As of October 13, the small-cap Russell 2000 Index was down 12.9% from its 2014 high on July 3a double-digit correction not seen in more than three years. With the U.S. economy slowly improving and Fed tapering winding down as scheduled, what is driving this pullback? Co-Chief Investment Officer Francis Gannon talks about economic growth beyond our borders and how it has been playing a role in shifting investor sentiment.
Got Loans?
?We believe select investors looking to reposition portfolios may benefit from a move to senior secured floating rate loans.
CLOs have been an important source of demand in the market, and even with more strict risk retention rules just announced under Dodd Frank, we think demand will remain strong.
While the Fed has criticized some banks for not following their leveraged lending guidelines, Fed members themselves, in our view, do not appear concerned about loans having a major impact on financial stability.
On Top of the Market
The third quarters seventh straight gain for the S&P 500 did not come easy. Investors wrestled with geopolitical turmoil in Ukraine and the Middle East, and the eventual end of the Federal Reserves (the Fed) bond buying program. U.S. small-cap stocks were volatile and fell into negative territory, year-to-date.
Retirement: How To Avoid Outliving Your Savings
With over 10,000 Baby Boomers retiring every day, a pattern that will continue for the next 20 years, retirement savings continues to be one of the most important issues of our day. With 76 million Americans born between 1946 and 1964 the Baby Boom Generation saving enough for retirement is critically important.
Loomis Sayles Core Plus Bond Fund: Navigating Dynamic Markets with Tactical Flexibility
The global economic cycle is a perpetual force influencing interest rates, credit availability and capital markets. For core plus managers who seek to generate total return by balancing liquidity and risk, these undulations pose a clear challenge.
The Economy: October Viewpoint
The U.S. economy continues to move forward in its slow but steady recovery. Despite the Federal Reserve ending their bond buying program in October, demand for U.S. fixed income continues to be robust. The recent downward movement in the stock markets has some investors talking correction once again, and growth concerns overseas finally seem to affecting the performance of the domestic markets. We believe there is still more room for improvement for foreign economies, while the U.S. seems to be a more stable environment.
Five Ways to Keep Out of the Bond Liquidity Trap
by Douglas Peebles of AllianceBernstein,
Bond investors are used to managing interest-rate risk and credit risk. But the financial crisis should have taught us that there are times when liquidity risk can be just as important to manage. Now is one of those times.
Is Smart Beta Smart Enough?
As smart as smart beta might be, it is not smart enough to answer the most important question in beta management. The key to successful beta management, regardless of whether the beta is smart or dumb, depends primarily on the choice and timing of beta. A strategy that focuses on smart beta without consideration for full beta management seems very likely to underperform.
Five Ways to Keep Out of the Bond Liquidity Trap
The good news is that liquidity risk is manageableand can even offer attractive opportunities, given the right time horizon. When liquidity dries up in one sector, it can be plentiful in another. If managed properly, it can be an additional source of returns. Here are five things investors can do to stay afloat.
How M&A Resurgence May Unlock Value
Growth is a strong motivator for initiating mergers and acquisitions (M&A). For years, businesses created progressively more complex organizations, acquiring or expanding into unrelated business lines, consequently often suppressing overall company valuations. The complexity of melding disparate corporations appeared to make it exceedingly difficult for investors to evaluate companies true worth. In the present period of slow U.S. economic growth, a new trend in M&A has emerged, as many companies are reversing these moves, benefiting stock prices, investors and, potentially, the
What PIMCO Management Changes Mean for Investors
by Team of Charles Schwab,
Bill Gross resigned from his role as PIMCOs Chief Investment Officer to join Janus Capital. The PIMCO funds on the current edition of Schwabs Mutual Fund OneSource Select ListTM are not managed by Gross. There are no PIMCO ETFs currently on Schwabs ETF Select ListTM. A list of funds formerly managed or co-managed by Gross is available below.
Vision 1994
by Mark Headley of Matthews Asia,
Twenty years ago, Paul Matthews decided to launch two Asia ex-Japan mutual funds in the U.S. and create what is today the Matthews Asia Funds. One was a core Asia ex-Japan growth fund with a mid-capitalization bias. The other fund was a unique portfolio with a focus on Asian convertible bonds. Thus began the journey of the Matthews Pacific Tiger and the Matthews Asian Growth and Income Funds.
Uncertainty in markets, economy puts focus on stock picking
The U.S. Federal Reserve (Fed) has indicated it will stop buying U.S. Treasury bonds and mortgage-backed securities the taper of its QE3 program by the end of October. The Fed also has said it will keep interest rates at a very low level for a considerable time.
Forget Active vs. Passive: It's All About Factors
We just love a good debate, and there seems to be quite a heated debate at the moment about the relative utility of passive versus active investing. Perhaps this debate is as timeless as investment management itself, but a flurry of recent studies may have finally armed passive advocates with enough ammunition to settle the argument once and for all.
Fed Forecasts Sub-3% Economy for the Next Three Years
The Feds policy committee announced last Wednesday that it will end its massive QE bond buying program at the end of next month, thus paving the way for the first Fed funds rate increase sometime next year. This was not a surprise. The Feds gargantuan balance sheet will peak near $4.5 trillion in Treasury and mortgage-backed bonds at the end of October.
Jeremy Siegel vs. Zvi Bodie: Does Equity Risk Decrease Over Time?
Stocks should be the asset class of choice for the long run, according to Wharton Professor Jeremy Siegel - and he has provided the data to prove it. But that paradigm has been challenged by Boston University Professor Zvi Bodie and others, who have shown that stocks become riskier the longer one owns them. Either view has profound implications for whether equity allocations should increase or decrease over time. Using Monte Carlo simulations, we provide guidance for the advisory profession.
Weekly Market Update
by Team of Castleton Partners,
In a week defined by increased rate volatility, Treasury yields ended mixed, as the yield curve continued to flatten. Registering its first monthly decline in over a year, the Consumer Price Index (CPI) continued to support a benign inflationary environment, further supporting long-dated instruments. With global inflation subdued, central banks around the world remain more concerned about lapsing back into recession than about frothy risk markets and potential bubbles.
Alternative Approaches for Managing Emerging Market Equity Portfolios
The shortcomings of indexing are especially evident in frontier markets, where some very small markets have significant weights. This paper discusses three approaches for targeting inefficiencies in emerging markets. These approaches are designed to fit together and complement each other within an investment portfolio. Overlap is generally minimal, so investors may reasonably employ all three.
Michael Aronstein on the Fed's Latest Mistake
by Robert Huebscher,
Since the Fed began its post-crisis monetary easing, a cult of second-guessers has emerged. The most extreme cry of "dollar debasement" or admonish that markets are doomed for hyperinflation. The more reasonable view, articulated by Michael Aronstein at a recent conference for financial advisors, is that near-zero interest rates and QE have distorted markets, but it is unclear when or how that will impact investors.
Banking on the Growing Strength of the Financial System
by Dave Ellison of Hennessy Funds,
Thiscommentary explores the U. S. financial systems profound changes. In 2007, the financial system began to unravel due to excessive leverage, credit risk and overall business complexity. As we look forward, we see a potentially more stable profit picture developing for these firms. And, a rising interest rates environment has historically translated to increased revenue for banks and financial institutions. Dave Ellison believes the financial sector is ripe with opportunity.
“You’re Going to Need a Bigger Boat”: Alpha and Interest Rates
Caution has been the dominant sentiment among investors in recent times even as equities have continued to march along. But as the prospect of rising US interest rates becomes ever more real, Brooks Ritchey, senior managing director at K2 Advisors, Franklin Templeton Solutions, takes a look at how some individuals and institutions are changing their guarded approach. He says alternative investments could find increased interest among savvy investors as interest rates start to tick higher.
Gundlach on Today's Surprising Driver of Bond Prices
by Robert Huebscher,
Inflationary pressures could ultimately trigger an uncontrollable spike in interest rates, according to Jeffrey Gundlach, but such predictions are likely at least five years too early. In the short run, he identified the key driver that will keep rates low - the strong performance of European bond markets.
Weekly Market Update
by Team of Castleton Partners,
After a strong summer rally, the first two weeks of September have not been kind to US financial markets, with both stock and bond markets generating negative returns. In the month to date, ten year Treasury yields have risen twenty five basis points to 2.60%, the highest such level since the first week of July.
Growing Income and Wealth with High-Dividend Equities
High-dividend equities have significant advantages for growing income and wealth: getting sufficient yield, keeping up with inflation and outliving available funds. Such a portfolio produces higher income per dollar invested, growing income and principal over time, higher total returns, lower volatility and a reduced risk of outliving savings.
Back in the Saddle Again: Time to Pull in the Reins?
by Liz Ann Sonders of Charles Schwab,
Interest rates and seasonal tendencies are taking some attention away from the stronger economy and pose short-term risks for the stock market. Another pullback would be welcome from a sentiment perspective and would not dent our longer-term optimism that we are in a secular bull market that still has room to run. But just as fear has been the strongest emotion keeping many investors out of this bull market, greed is an emotion to rein in as well.
Risk Revisited
In April I had good results with Dare to Be Great II, starting from the base established in an earlier memo (Dare to Be Great, September 2006) and adding new thoughts that had occurred to me in the intervening years. Also in 2006 I wrote Risk, my first memo devoted entirely to this key subject. My thinking continued to develop, causing me to dedicate three chapters to risk among the twenty in my book The Most Important Thing. This memo adds to what Ive previously written on the topic.
The Long-Term Value of Active Management in the Small-Cap Space
by Chuck Royce of The Royce Funds,
As the ongoing debate about the effectiveness of active management, especially since the proliferation of ETFs and index funds, continues unresolved, it is difficult for us not to be biased. Our focus, however, remains solely on long-term outperformance and the interests of our shareholders, and we believe the best way of accomplishing this is through careful stock selection and having an absolute standard.
The Demise of Active Management is Greatly Exaggerated
Financial advisors and registered investment advisors feel severe pressure to throw in the towel on manager selection methodologies and accept index returns. Yet, many of these stories forget one central concept: indexes are actually inexpensive actively-managed portfolios. Every actively managed fund is an index itself.
Event Driven Managers Encounter a Short-Term Hiccup
After a period of very strong deal activity during the first half of 2014, traders and investors were hit with arbageddon in early August. Arbageddon struck after a series of large deals fell apart, sparking concern that the pickup in activity from earlier in the year was coming to an abrupt halt. Activity since that time would suggest otherwise, and it appears that the M&A train is back on course.
Correcting a Common Misconception about Alternative Investments
by Walter Davis of Invesco Blog,
A common misconception about alternative investments is that these investments have failed anytime they underperform the stock market. Investors need to know that alternative investments are designed to achieve returns that are more consistent and less volatile than those of the stock market on a long-term basis across multiple market cycles.
Dynamic and Durable Growth Part 4: The Coming Mobile Advertising Boom
by Ido Cohen of Invesco Blog,
This is the fourth in a four-part series examining dynamic and durable growth themes that affect the US economy and present opportunities for investors. The first post examined the biotech revolution, the second explored the enormous implications of shale energy, and the third looked at the impending mobile data tsunami.
Toward the Sounds of Chaos
Stock market volatility is always a scary thing. Investors nearing retirement fear their nest eggs will evaporate. Younger investors saving for a home or a childs college education fear their families futures might be in doubt. However, history suggests that allowing volatility to overrule a good investment plan tends to lead to poor performance. Its not volatility itself that generally leads to poor longer-term performance, but rather it appears to be investors emotional reactions to volatility that ultimately lead to poor performance.
Municipal Market Perspectives
Heightened international unrest and the likelihood of accelerating economic weakness in Europe will provide further support for fixed income securities. It is unlikely central banks will move from their current accommodative monetary positions anytime soon. Since we do not anticipate a meaningful upward move in Treasury rates, municipal bond prices should also benefit. Yields are likely to remain close to current levels and even possibly move lower. Strong market technical factors will also provide support.
Long/Short Funds Go 'Unhedged' in Energy
by Brian Payne of Fortigent,
Over the course of 2014 investors have come to notice the increase in net exposures amongst long/short equity managers. Many investors have grown somewhat wary of this development. Given the markets relatively uninterrupted run-up since late 2012, it is rational to think that these types of strategies might naturally lower their overall net exposure.
Weekly Market Update
by Team of Castleton Partners,
In a week devoid of meaningful economic data, financial markets were once again led by intensifying geopolitical events. With stock indices across the globe recording losses of 1%-3% on the week, US ten year yields declined to a low of 2.35% on Fridaya new low for 2014 and the lowest such point since June 2013. Since the onset of the Ukraine crisis in February, and later followed by the Iraq/ ISIS and the Israel/ Gaza conflicts, global sovereign yields have declined to levels unthinkable at the turn of the year.
Dynamic and Durable Growth Part 3: The Mobile Data Tsunami
by Ido Cohen of Invesco Blog,
This is the third in a four-part series examining dynamic and durable growth themes that affect the US economy and present opportunities for investors. The first post explored the biotech revolution, and the second looked at the enormous implications of shale energy. The final post will examine the coming mobile advertising boom.
US Stocks Make 31 Record Highs in 2014, But Investors Panic During 3% Selloff
US stocks as defined by the S&P 500 made 31 record highs in 2014, most recently on July24th. Through Friday afternoon, stocks declined 3.3%, which is to say less than the decline of 4.2% we saw in April of this year, and decline of 5.6% in January.
Dynamic and Durable Growth Part 2: The Enormous Implications of Shale Energy
by Erik Voss of Invesco Blog,
This is the second in a four-part series examining dynamic and durable growth themes that affect the US economy and may present opportunities for investors. The first post explored the biotech revolution, and the third and fourth posts will discuss the massive changes in mobility.
Index funds beat active 90% of the time. Really?
My last article suggested six ways in which retired and retiring investors may be lulling themselves into a false sense of comfort. They do this by adhering to ideals that were originally postulated many years ago, and which today still have some merit. But theyve become clichs to a point where their foundation is no longer questioned when it needs to be. They are myths which need to be busted
Second Quarter 2014 Investment Commentary
by Team of Litman Gregory,
Overall, our macro view and assessment of the risks and returns across the major asset classes has not changed meaningfully since last quarter. We continue to see the U.S. and global economies on a slow path of recovery from the 2008 financial crisis. ... Despite our more positive fundamental outlook, we also continue to view the markets as too dependent on central bank largesse, too short-term focused, and too complacent about the risks and imbalances that remain in the global economy in the aftermath of the financial crisis.
The Outlook for MLPs and Midstream Energy Infrastructure Continues to Look Bright
The quarter saw a number of positive developments that underpin our long term positive outlook on MLPs. Firstly, the need for new midstream infrastructure remains significant, and a number of announcements of large new projects highlighted that this need is not abating. Also, a significant new development in the quarter was the emergence of new export markets for ethane and condensate which will entail associated infrastructure development and other possible profit opportunities for MLPs.
Results 2,701–2,750
of 3,332 found.
