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High Stock Dividends: A Competitive Retirement Income Solution
by C. Thomas Howard of AdvisorShares,
Sufficient yield, keeping up with inflation, and outliving the funds available are three major concerns facing investors who are building a retirement portfolio. A high dividend yield equity portfolio can provide a competitive approach to addressing each of these concerns.
Dynamic and Durable Growth - Part 1: A Biotech/Pharma Revolution
by Janet Luby of Invesco Blog,
This is the first in a four-part series examining dynamic and durable growth themes that affect the US economy and may present opportunities for investors. The remaining three blog posts will examine the enormous implications of shale energy and the massive changes in mobility.
Does Active Management Succeed in International Small-Caps?
by Team of The Royce Funds,
Divergent conclusions about the relative success of active management in the international small-cap universe prompted us to do our own examination, which stresses the importance of choosing the appropriate benchmark and evaluating the consistency of a fund's performance over long-term time periods.
U.S. Equities Continue to Look Attractive: Equity Investment Outlook
by Team of Osterweis Capital Management,
As we sit down to write this Outlook we are struck by two trends: the consistency of the economic recovery in the U.S. and the dramatic escalation of geopolitical turmoil. Whether these two trends will collide to derail the bull market is an open question, but usually geopolitical flare-ups have only short-term effects and do not overwhelm long-term economic trends. Thus, they tend to appear as hiccups in stock market progress.
2014 Another Ho Hum Year from Hedge Funds
by Ryan Davis, Brian Payne of Fortigent,
Through the first six months of the year, hedge funds have generated a positive, albeit somewhat modest return. According to data compiled by Hedge Fund Research, the Fund Weighted Composite of hedge funds in their universe had generated a 3.2% return, compared to the S&P 500s 7.1% gain. While not terrible on a standalone basis, many investors had greater hopes for the asset class following five straight calendar years of underperformance versus the broad equity markets.
Mid-Year Review: Interest-Rate Sensitive Stocks May Correct With First Fed Rate Hike
by Rick Golod of Invesco Blog,
With the recent strength in the economy and decline in the unemployment rate, the probability that the Federal Reserve (Fed) increases rates in the first half of 2015 is rising, in my opinion. Given the volume of media noise about this, its understandable that many investors are still worried about the stock markets potential for correction.
Red Shoots - Today's Top Investor Concerns (Also Known as the Investors "Dirty Dozen")
A while back, we published a list that we continually update at Sungarden. We call them Red Shoots. They are essentially the opposite of a set of conditions which gave investors hope that not all was lost, in the throes of the financial crisis of 2008. Those reasons for optimism were called Green Shoots, like a patch of short green grass about to show up on the dirt area you will one day call your lawn. Red Shoots are the opposite: they are the reasons for extreme caution when the market and many investors seem to be forgetting that security prices are not a one-way propositi
Fireside Chats
by Jeffrey Saut of Raymond James,
While I was in the Pacific Northwest and Canada most of last week, I did have the privilege of listening to J.P. Morgans (JPM/$55.80/Strong Buy) Chief Market Strategist last Monday. Dr. David Kelly has long been known for his keen insights on the equity markets, with JPMs senior portfolio managers like George Gatz and Tom Luddy steering their mutual funds, on said strategic views, to outsized gains for many years.
Physics Envy
Economists have long sought to identify a deterministic "natural law" of markets in the same way that physicists have discovered natural laws such as gravity and electromagnetism. This is sometimes referred to as "physics envy". If economists could identify a deterministic natural law of markets then we would be able to make useful and accurate predictions. Sadly no such law exists. Human actions are not governed by simple predictable laws.
Analysis of Ayres and Curtis Critique of 401(k) Plans
In our previous article we reviewed [Professors Ayres and Curtis's paper Beyond Diversification: The Pervasive Problem of Excessive Fees and 'Dominated Funds' in 401(k) Plans] (John M. Olin Center for Studies in Law, Economics, and Public Policy Research Paper No. 493). Our purpose in that article was simply to describe what Professors Ayres and Curtis are saying. In this article we evaluate their findings and proposals, discussing the limits of and possible objections to their conclusions.
The New Neutral: Investment Implications for Insurance Companies
by David Braun of PIMCO,
Low rates are unhelpful to an industry with legacy long-term liabilities containing rigid embedded credited rates; they exacerbate asset-liability mismatches and pressure earnings margins. Insurers may want to recalibrate their expectations of future interest rates, as well as broad bond and equity market returns. In The New Neutral, with beta from stocks and bonds likely to be relatively low, insurers should look to enhance buy-and-hold return potential via active management.
Weekly Market Update
by Team of Castleton Partners,
Geopolitical headlines, coupled with renewed stress in European markets, led to a strong rally in US Treasuries last week. Further supporting the decline in interest rates was the perceived dovish overtone to the minutes of the June Federal Open Market Committee meeting.
Energy: Shale Generates Tectonic Changes
by Stephen Toy of Invesco Blog,
The shale revolution, only seven or eight years old, has been the catalyst for a tectonic change in US energy production and policy. It has also created a new paradigm in US manufacturing, launched a renaissance in the chemical industry, and is driving infrastructure spending. So how do we think about the shale revolution in terms of investing? Its twofold.
New Analysis of 401(k) Plan Performance and Fees
In the paper Professors Ayres and Curtis conclude that 401(k) plan participants suffer significant losses from (1) sponsor-fiduciary fund menu construction decisions, (2) participant asset allocation mistakes and (3) high fees on plan investment options. To remedy this problem they make several innovative proposals for changes in the rules for 401(k) plan fund menu construction.
India and Indonesia: Change, Challenge and Opportunity
by Jack Deino of Invesco Blog,
In both India and Indonesia, leaders are facing intense pressure from markets and investors to initiate reforms that are real rather than merely cosmetic. Our outlook is somewhat more bullish for India, but we believe change can lead to opportunity in both countries.
The New Normal of Healthcare Spending
by John Mauldin of Mauldin Economics,
A rather interesting shockwave came across the newsfeeds this week. I was actually doing a TV interview when the host announced that GDP was down 2.9% for the first quarter. There was not much else I could do but note that that was a really bad, ugly, terrible, not very good number.
How Road Construction Can Help With Portfolio Construction
by R. Scott Dennis of Invesco Blog,
Investors have long looked to real estate to provide income potential, hedge against future inflation and provide diversification to traditional stock and bond portfolios. More recently, an increasing number of investors have been expanding their horizons and including real assets in their portfolio construction as well such as infrastructure and master limited partnerships (MLPs). At Invesco Real Estate, we believe the US and the world is heading for a building boom that would bode well for real assets.
Rethinking Revenue Sharing
by Daniel Notto of AllianceBernstein,
While revenue sharing may be a legitimate way to pay for the costs of operating a plan, both US courts and the Department of Labor (DOL) have made it clear that plan sponsors have a significant responsibility as fiduciaries to fully understand, evaluate and monitor their revenue-sharing arrangements and determine whether they are reasonable. Therefore, the most prudent response for plan sponsors may be to rethink the practice of revenue sharing altogether.
How Proactive Advice Increases Client Loyalty
by Dan Richards,
You can certainly have clients walk away feeling good about staying the course, but you have to typically work harder to get clients to buy into that than to making shifts in their portfolios. Here are five proactive conversations you can have with clients.
How Morningstar Category Flux Impacts Peer Group Analysis
Morningstar's mutual fund categories are among the most frequently cited for peer group performance and investment approach comparisons. Our study, however, has found that membership in a Morningstar category can evolve considerably over time.
Red Sky in the Morn', Junk Bond Investors Be Warn'd.
by Bryce Fegley of Saturna Capital,
Investor appetite for income has pushed yields and spreads on high-yield bonds to very low levels, while corporate borrowers have fed that demand with record issuance of new debt. On top of low yields and heavy issuance, bond dealers have retreated from corporate bonds in response to new financial regulations. As a result of these factors, we believe now is a particularly risky time to invest in high-yield bonds. Here we offer some of our suggestions for seeking income and yield with less risk.
Weekly Market Update
by Team of Castleton Partners,
With geopolitical risks abound, financial markets were resilient yet again last week, thanks to the mostly dovish tone struck by the Open Market Committee of the Federal Reserve and its Chair, Janet Yellen. Despite recent economic indicators registering a pickup in growth and inflation, namely CPI, the FOMC reiterated its lower for longer theme in managing interest rate policy.
The Bond Trap
by Peter Schiff of Euro Pacific Capital,
The American financial establishment has an incredible ability to celebrate the inconsequential while ignoring the vital. Last week, while the Wall Street Journal pondered how the Fed may set interest rates three to four years in the future (an exercise that David Stockman rightly compared to debating how many angels could dance on the head of a pin), the media almost completely ignored one of the most chilling pieces of financial news that I have ever seen.
A Contrarians View of Value: Pharmaceuticals
by Kevin Holt of Invesco Blog,
The pharmaceuticals industry is in the midst of a renaissance. Patent expiration concerns, pipeline disappointments and setbacks, and a highly uncertain regulatory backdrop have forced managements to rethink the way they have historically conducted business. In this environment, certain companies stand out to us as deep value opportunities businesses whose stock prices dont reflect our view of their long-term potential.
Gundlach: A Big Moment for the Economy and the Markets
by Robert Huebscher,
The benchmark 10-year Treasury bond is an attractive investment, according to Jeffrey Gundlach, although its yield is likely to stay between 2.2% and 2.8% for the remainder of the year. Despite that narrow range, Gundlach foresees pivots in other parts of the investment landscape.
A Simple Explanation for DALBAR's Misleading Results
For a number of years, DALBAR has been publishing a report that purports to show that investors make bad decisions and, as a result, their investments underperform the market by several percentage points. It has captured headlines for years, perpetuating the myth that individual investors invest poorly, and therefore they do much worse than the market average. There's just one thing, the DALBAR result is wrong.
Weekly Market Update
by Team of Castleton Partners,
Treasury yields rose sharply last week, with intermediate and long date bonds registering the sharpest price declines, as US equities again reached new highs. Fridays eagerly anticipated May employment report came in line with market expectations, continuing to signal gradual improvement in the labor market. With +217,000 jobs created last month, May marked the first 4-month string of payroll reports over +200,000 since 1999.
The Modern Portfolio Flat Earth Society
Math and physics are rooted in equations that spit out precise answers; vagueness there is dangerous for the right reasons. That is why they are called exact sciences. Investing, despite being taught as an almost exact science, is far from it. It is a craft that falls somewhere between art and science.
A Contrarians View of Value: Financials
by Kevin Holt of Invesco Blog,
In the wake of the Great Recession, and significant regulatory changes, investors are concerned that large banks may not be able to generate the type of profits that they have in the past. We dont disagree with that assessment. However, we do disagree with the current equity valuations of the large banks we believe the market has priced in a too-pessimistic view of profitability.
Thai Coup: Business as Usual
On May 22, Thailands military launched its 12th coup after a failed attempt to get the caretaker government and the opposition to resolve a seven-month political stalemate. While the military has seized temporary control, we believe the coup will have limited economic and investment impact.
The Growing Importance of Natural Gas
by Skip Aylesworth of Hennessy Funds,
The natural gas industry is experiencing a revolution. Fueled by advances in drilling technology, natural gas has become an abundant energy source and is quickly becoming Americas domestic energy solution. In fact, it is believed that we now have a 100-year supply in the U.S. even with increasing demand.
After Indias Election, Execution takes Center Stage for Debt Markets
by Jack Deino of Invesco Blog,
Financial markets in India have already rallied strongly in anticipation of the overwhelming majority win by incoming Prime Minister Narendra Modi and the Bharatiya Janata Party (BJP). The countrys currency (the Indian rupee) rose 15% from its August peak, while five-year credit default swaps on the State Bank of India (SBI) tightened from a spread of 371 to 207 in the same period.
Three Questions Investors Need to Ask About Alternatives
by Donna Chapman Wilson of Invesco Blog,
The world of alternative investments includes a range of hedge fund-like strategies that typically consist of publicly traded equity and fixed income investments, but are unconventionally managed using a variety of exposures (long, short, market neutral) and financial instruments. These strategies have gained acceptance in recent years, and have become more widely available to individual investors through vehicles such as mutual funds. However, questions still remain about the best ways to incorporate them into an asset allocation strategy.
The Bull Market Isn’t Over. It’s Changing.
Markets, especially in the developed world, have hit new highs. However, a rising economic tide will no longer lift all boats to the extent it once did. Find out why Chief Economist Jerry Webman believes the winners are likely to be organic revenue generators, efficiency vendors and innovators.
Energy: An Overlooked Bull Market
by Ron Sloan of Invesco Blog,
Defensive stocks, such as health care and utilities, have led the market for most of 2014. But were starting to see a shift toward cyclical sectors that offer greater exposure to a strengthening economy. In my view, the most overlooked cyclical sector is energy, which has experienced a very strong start this year thats been under the radar of many investors.
Behavioral Finance and the Bond Market
Over the last decade the concept of behavioral finance has received increased recognition in both the academic world and with investors. Modern Portfolio Theory makes three distinct assumptions: investors are rational, markets are efficient, and expected returns are purely a function of risk. In contrast, followers of behavioral finance generally believe investors are less than perfect and subject to many emotional biases. Said differently, behavioral finance differs from traditional finance in that it focuses on how investors actually behave, rather than theorizing how they should behave.
Weekly Market Update
by Team of Castleton Partners,
US Treasury yields declined across the entire maturity spectrum last week, as renewed geopolitical risk more than outweighed a strong employment report. With inflation remaining well below the Fed?s target rate of 2%, long dated Treasury yields continued to decline at a faster rate than shorter dated yields, further flattening the yield curve.
Retail, Infrastructure Are Issues to Watch in Colombia and Peru
by Jason Trujillo of Invesco Blog,
The Invesco Emerging Markets team spent a week traveling through Colombia and Peru, meeting with company management teams, consultants and government officials. During our trip, two themes were prevalent that could have broad implications for local companies and global investors: the relative under-penetration of modern-format retailing throughout Colombia and Peru, and the severe need for infrastructure improvement.
?Cautious? Investors: Saying One Thing, Doing Another
by Russ Koesterich of iShares Blog,
Five years into an equity bull market, investors say they?re still cautious. However, Americans hold as much risk in their financial portfolios as they did during the tech bubble in 2000. Russ explains what?s behind this trend and what it means for investors.
Positioning Your Portfolio for Rising Rates.
by Team of Forward Management,
Accelerating outflows from bond funds in 2013 highlight investor nervousness over the prospect of rising interest rates. Investors may want to carefully assess the role of fixed-income investments in their portfolios, particularly in light of other types of income-producing vehicles. Upon careful evaluation of their options, investors can make adjustments suitable to their objectives.
Rising Food Prices May Whet Investors' Appetite for Agriculture
by Nick Kalivas of Invesco Blog,
Food prices are affected by a wide range of factors - from weather to geopolitics. Today, these factors seem to be pointing toward rising food inflation, and investors want to know where potential opportunities may lie.
Results 2,751–2,800
of 3,332 found.
