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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 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.
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.
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.
Equity Outlook
by Team of Osterweis Capital Management,
Short term, we would not be surprised if the market took a breather after its strong gains last year. Additionally we may see volatility related to news coming out of the Middle East and Russia. But longer term, we remain very optimistic on the outlook for U.S. equities. In addition to the reasons we discussed above we believe U.S. equities are very attractive relative to the alternatives. The great bull market in bonds appears to be over. The great decades of emerging market growth appear to be behind us.
What's Wrong with PIMCO?
When Federal Reserve Chairman Ben Bernanke first talked about reducing or tapering the Federal Reserves asset purchase program back in May of 2013, the market response was dramatic. Investors started fleeing bonds, causing bond prices to drop and bond yields to rise. In a rising interest rate environment, the net asset value (NAV) of fixed income mutual funds falls as rates rise. This often leads to shareholder redemptions (they want out!), forcing these bond mutual fund portfolio managers to sell bonds in an unfavorable market.
Why Today?s Environment Favors Active High Yield Strategies
Fixed income investors are looking for ways to prepare their portfolios for rising interest rates. While bond prices generally fall when rates rise, history shows that high yield bonds have typically held up well in rising rate environments.
Every Central Bank for Itself
Whether the FOMC can actually turn the taper into a true exit strategy ultimately depends on how much longer households and businesses must deleverage and how sharply our old-age dependency ratio rises, but markets seem to believe this is the beginning of the end. For now, that?s what matters most. Under Fed Chair Janet Yellen?s leadership, the Fed continues to send a clear message to the rest of the world: Now it really is every central bank for itself.
The Russians Are Coming
by Jeffrey Saut of Raymond James,
The Russians Are Coming, The Russians Are Coming is a 1966 American comedy film directed by Norman Jewison and based on Nathaniel Benchley?s book The Off-Islanders. The movie tells the Cold War story of the comedic chaos that happens when a Soviet submarine runs aground closely offshore a small island town near New England and the crew is forced to come ashore. Last Friday, however, rumors that the ?Russians are coming? swirled down the canyons of Wall Street, causing a late Friday Fade that left the S&P 500 (SPX/1865.09) down an eye-popping 24 points.
"I Will Gladly Pay You Tuesday for a Hamburger Today"
In October of 2013, Robert Shiller won the Nobel Prize in economics for his research on spotting market bubbles. Shiller, an economist and professor at Yale University who accurately predicted the housing bubble, is a pioneer of behavioral finance, or the understanding of how psychology causes us to act irrationally with our money.
And That's The Week That Was
by Ron Brounes of Brounes & Associates,
One quarter down; three to go. After a rough January, stocks rebounded to complete a solid quarter with the Dow Jones the lone main index still "in the red." The new week found decent numbers from manufacturing and labor and investors moved past the "bad weather" excuse, though still took profits from high-flying bio-techs and internet stocks. The late-week selling hindered the overall equity performance.
How High-Frequency Trading Benefits Most Investors
A controversial new book came out in late March that lambastes so-called ?high-frequency trading? on the major stock exchanges and claims that such computerized trading robs retail investors of good executions and profits on their stock orders. The book, ?Flash Boys: A Wall Street Revolt,? was written by former bond salesman turned author, Michael Lewis, who appeared on CBS? 60 Minutes on March 30. Since then, his book has stirred up quite the controversy among stock market investors.
Is This an Andy Hardy Kind of Market?
With Mickey Rooney?s death over the weekend (at age 93, after accumulating show business credits spanning 10 decades), I got to thinking about the Andy Hardy movie series that propelled Mickey at the ripe old age of 16 into stardom. In the 50?s the TV screen was awash with black and white classics of the 30?s and 40?s. Like the Great Depression generation, many of the baby boomers binged on Andy Hardy movies long before Walking Dead, Breaking Bad or House of Cards.
Avoiding Complacency
by Heather Rupp of AdvisorShares,
Active managers dont have a mandate to hold any certain securities, thus they can pick and choose as to what they feel offers the best return level for a given risk profile. The high yield bond market still offers plenty of what we view as very attractive opportunities in credits that we see as solid companies at yields about 300 basis points or more above the yield level on this bond.
Available at a Low Price in Relation to Intrinsic Value
At Smead Capital Management, valuation matters dearly. We believe all the academic studies from Fama-French, Bauman-Conover-Miller and Francis Nicholson, show that cheap stocks as measured by price-to-book value (P/B), price-to-earnings (P/E) or price-to-dividends outperform more expensive stocks. We especially love Nicholson?s 25-year study because it shows that the 100 cheapest stocks that make up the lowest P/E quintile see their outperformance expand the longer you hold them. Cheapness is the gift that keeps on giving.
European Rally Has Legs
by Nick Kalivas of Invesco Blog,
Since hitting a low on June 1, 2012, the MSCI Europe Index has rallied 64.73%. In our view, there?s room for European equity markets to advance further, supported by strong fundamentals, positive flows and a steady uptrend from the June 2012 low.
What Has Been Fueling the Rise of Gold in 2014?
by Kevin Mahn of Hennion & Walsh,
Gold declined approximately 28% for the year of 2013, its worst annual performance since 1981 according toUSA Today. At that time, the downturn ended Golds own bull market run of 12 consecutive years as investors jumped on the back of this current bull market by piling into stock funds in 2013 and largely exiting bond funds.
Looming Retirement Crisis ? Boomers In Big Trouble!
Let?s face it, we all know this country is facing a retirement crisis. The first of the Baby Boomers turned 65 and started retiring in 2011. The number of Boomers retiring each year will rise rapidly over the next decade or more. Before the end of this decade, Boomers will be turning age 65 at the rate of 8,000 per day.
Yes, Even Advisors Get Bullied!
I am a financial advisor who is being bullied in my office. I cannot sleep, have constant anxiety and feel like I am working under war-like conditions. I have tried everything to shore up my confidence, but I cant stop the onslaught of vitriol that comes at me every day.
Our Most Read Article from Last Week: Gundlach - Rates Will Remain Low in 2014
by Robert Huebscher,
Slowing economic growth, low inflation and a lack of motivated sellers will keep interest rates depressed, at least for the rest of this year, according to Jeffrey Gundlach. But investors should prepare for an eventual rise in rates, he said, because he is skeptical of the Federal Reserve’s ability to successfully exit from QE.
Is the Fed Supporting the Equity Markets?
by Tom Riegert of Hatteras Funds,
The Federal Reserve?s unprecedented increase in reserves purchased through its quantitative easing programs has paralleled the performance of the equity markets to a startling degree. Has the Fed?s program been supporting the equity markets? We examine the strong correlation between the Fed?s balance sheet and the performance of the S&P 500 since end-2008, and ponder the effects the Fed?s long-awaited tapering will have on market volatility. Investors facing the uncertainty ahead could well find alternative investments a welcome addition to their portfolio.
Results 2,801–2,850
of 3,362 found.
