Challenging Conventional Wisdom

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Challenging Conventional Wisdom"

Transcription

1 with Rick Golod GLOBAL INVESTMENT INSIGHT August 7, 2015 Challenging Conventional Wisdom Rick Golod Chief Global Strategist It wasn t just a difficult month for investors; it s been a difficult year. Perhaps it s time to challenge conventional thinking and change the way we invest? Overview July was a volatile month for global equities. Investors had to deal with the Greek bailout uncertainty earlier in the month, and the bursting of China s stock market bubble towards the end. The positive resolution in Greece (at least for now) led to positive equity returns for the major developed regions in July. S&P % MSCI-Europe +3.1% Nikkei +0.5% MSCI-EM -7.3% China -10.9% However, these returns masked the large disparity between regional and sector performance for the month. European equities outperformed emerging market equities by more than 10%. The retailing sector outperformed the energy sector by almost 13%. China s market turmoil also spilled over into the commodity markets over concerns of slower economic growth; the Jefferies/CRB index was down % for the month, and Brent crude prices fell -16.3%. It wasn t just a difficult month for investors; it s been a difficult year. Investors who own an S&P 500 Index fund are up 2.6% in price. Long-term Treasury bonds remain slightly negative for the year. Investment grade corporates are barely breaking even. Commodities are down 37%, and gold is down more than 8%. Large cap growth is outperforming large cap value by 770 basis points. Investors that have a well-diversified portfolio have probably made little-to-any progress building wealth this year. Conventional wisdom on how to invest isn t helping. Investors have been convinced to: buy no-load index funds, equally weight growth and value, remain fully invested, stay short duration and rebalance allocations every year to agreed-upon levels. Perhaps it s time to challenge conventional investment thinking and change the way we invest? Consider the following: Should you always stay fully invested? We ve all heard, it isn t timing the market, it s time in the market. Tell that to someone who owned the market from: , , or In each of those cycles, the market traded at the same level in the end year as it did in the beginning year. Dow Jones Industrial Average Log Scale /29/06 10/31/16 10/31/26 10/31/36 10/31/46 10/31/56 10/31/66 10/31/76 10/31/86 10/31/96 10/31/06 SOURCE: Bloomberg Page 1

2 Page 2 Owning a no-load index fund from May 1, 1997 to March 18, 2009 made zero returns. Beware of absolutes. Don t equally weight growth and value. Over the past 145 years, there have been long stretches when the equity market traded sideways where it made little sense to be fully invested in U.S. stocks. I m not talking about moving in and out of the market multiple times per year. I m talking about avoiding the big down-turns. Investors should identify whether the equity market is in an uptrend or a downtrend. In a bull market, buy the dips. In bear markets, sell the rallies. Key market levels are also well known by market technicians, for short-, mid- and long-term investors; signals on when to raise cash or change strategies. When the market reaches a key inflection point, then it would be time to change the way to invest; raise cash, utilize defensive strategies or own concentrated stock portfolios. There are always stocks that go up in a down market but not if you own an index fund. It s not time in the market; it s avoid the big down years. Avoid no-load index funds active managers DO add value, despite fees. The academic studies are pretty clear on this issue. Trading costs and fees make it difficult for active managers to outperform the market over time. That is, for most managers, not all managers. Beware of absolutes. Owning a no-load S&P 500 index fund from May 1, 1997 to March 18, 2009 made zero return except for dividends. After almost twelve years in the market, a $100,000 investment would have been worth the same $100,000. However, if an investor had purchased a fund offered by one of the largest mutual fund companies and paid the highest fees (8.5% front-end load), that same $100,000 would have been worth $168,700, net of fees. This wasn t even one of the better-performing funds. Yes, I specifically picked the timeframe in order to prove the point. As I said to my ex-financial advisor who felt active managers couldn t outperform index funds, Perhaps you should spend more time on how to select managers; then I transferred my account. Yes, it has been more difficult for active managers to outperform the market index, certainly since the recovery began in The easy answer is fees. But, perhaps there s another reason. Perhaps the answer also lies in the way portfolio managers buy equities. Most, if not all, active portfolio managers try to buy quality companies at low valuations that are growing earnings. Since QE, the best-performing stocks have been lower priced companies with low quality balance sheets. Expensive stocks continue to get more expensive. There has been little benefit in owning undervalued companies with quality balance sheets. Portfolio managers have also not benefitted from worrying about the potential downside in the market. The S&P 500 Index hasn t had a 10% correction or greater since It would appear that active managers placed too much importance on quality earnings growth, buying stocks with low valuations relative to their sector or the market with manageable debt levels. In other words, most portfolio managers placed too much importance on good fundamentals. Shame on them! All I know is that the 1% 2% savings in fees from owning an index fund isn t going to help much in a bear market or a market that trades sideways for an extended period. At the beginning of a bull market, buying a no-load index fund is acceptable. Buying an index fund in the later stages of a bull market will make it difficult to build wealth, in my opinion. Finding good managers has always been difficult and requires hard work. There are numerous mutual funds that outperformed the S&P 500 Index over the past five years, net of fees. Perhaps we should spend time on how to identify the future outperformers instead of using an investment approach that buys stocks based on size, i.e., index funds. Don t equally weight growth and value. In the mid-to-late 1990s, every time investors took money out of large cap growth stocks to rebalance their portfolio into value, they reduced their returns. In fact, during that timeframe, rebalancing portfolios out of large cap growth into anything else, lowered returns for the most part. It didn t pay to diversify and I saw no sell signals to get out of growth, except valuations, which have almost no predictive ability. In the past five years, the Russell 1000 Growth Index is up 108% and the Russell 1000 Value Index is up 81%. Just in the past seven months, the growth outperformance over value has gotten more extreme, 770 basis points. In this age of information and analysis, I believe investors could build more wealth if they made asset class and/or sector tilts (overweights/underweights) using factors with high probability outcomes. There are a number of factors that show when growth or value outperforms. Currently there are more than seven different factors that all point to growth continuing to outperform value stocks. Growth tends to outperform value stocks when: global growth is slowing or below average, the dollar is strengthening, interest rates are rising, global PMI is rising, or the U.S. economic surprise index is outperforming the international economic surprise index, to name just a few.

3 Page 3 Don t stay short duration. The real question is to what degree should income oriented investors own fixed income? Implementing an overweight and underweight tilt builds wealth faster than using an equally weighted approach. For long-term investors, consider making one adjustment a year, no more than two, and only if the data suggests making an adjustment. Portfolio rebalancing shouldn t occur on a specific date, but rather when the decision makes sense and only when based on factors with high probability outcomes. Investors should consider rebalancing their portfolios based on factors that have predictive power in asset class or sector outperformance. For instance, when the book to price ratio for the Russell 2000 (small caps) relative to the Russell 1000 (large caps) is less than 1.29X, large cap stocks tend to outperform. I believe this would be one of the inflection points an investor could use to determine when to shift an overweight into large cap stocks. Don t stay short duration. Investors should NOT shorten duration when the output gap (excess capacity) is closing slowly. In simple terms, there don t appear to be any imbalances between supply and demand in: labor, manufacturing or capital that would drive interest rates significantly higher. Fed Chair Janet Yellen is likely to move the Fed Funds Rate higher on a slow and measured pace to 2% and hold for an extended period. Interest rate volatility is likely to increase, but settle in the 3% range for 10-year Treasuries and 4% for 30-year Treasuries. The yield on long duration bonds should more than compensate for slightly higher interest rates and outperform short duration paper on a total return basis, in my opinion. However, we are talking about relative performance to other fixed-income vehicles. The real question is to what degree should income oriented investors own fixed income? Emerging market debt is highly correlated to oil prices, which will likely continue to put downward pressure on this asset class. The U.S. high yield corporate bond market just broke below three major support levels, suggesting further weakness ahead for this asset class. Ten-year Treasury yields remain in an uptrend despite recent declines. It would take a break below 2.14% before we might see 10-year Treasuries trade in the 1.63% 1.85% range. Based on current and forward-looking data, technical analysis and proprietary quantitative models, investors should consider overweighting/underweighting the following asset classes: Equities United States Large cap growth Large cap value Small cap growth Small cap value International Europe Japan Emerging Markets China India Fixed Income Treasuries IG Corporates HY Corporates HY Minus EM Debt Specialized Investments Senior loans/clos Global Macro L/S Managed Futures L/S Neutral + ++

4 Page 4 The problem is, when China sneezes, other emerging-market countries catch a cold. Emerging markets Underweight Emerging market earnings are declining at a rate we haven t seen in five years: down 10% since the beginning of the year. The problem is, when China sneezes, other emerging-market countries catch a cold. Margin debt still remains 300% above year-ago levels and 30-day market volatility has surged to the highest levels since the Asian crisis back in These metrics suggest further downside risk. Chinese margin debt still triple from a year-ago levels Mar Jun Sep Dec Mar Jun SOURCE: Thompson Reuters Datastream United States Neutral The U.S. economy lacks a certain degree of vitality. But, analysts have upgraded earnings four consecutive months, which has brought forward price multiples below cautionary levels (17X). Currently, companies with quality balance sheets with low default risk are outperforming, which means: growth stocks with pricing power are likely to continue to outperform. The Value Index is rife with economically sensitive companies with high fixed costs. A weaker euro/dollar exchange rate should continue to move European equity prices higher. Europe Overweight If it wasn t for China, European equities would be trading at higher levels. The firewall that Draghi built prevented a massive tightening in financial conditions, which was one of the problems in 2010 and A weaker euro/dollar exchange rate should continue to move European equity prices higher. Japan Overweight The Japanese equity market is likely to continue to move higher on massive quantitative easing, a weaker yen/ dollar exchange rate, continued upward earnings surprises, and a gentle upward move in core inflation. Targeted Opportunities Overweight There are a number of investment vehicles that provide bond-like income with little to any interest-rate risk which would likely provide a better risk/return outcome than fixed income. Final Thoughts Quantitative easing has made it difficult to consistently make money using active managers, or making sector and/or asset class overweights over the past six years. Investors were better off just buying a no-load index fund, but that is about to change. QE tends to reward risk-taking and momentum investing, trumping fundamentals. Macro events had more impact on stock prices than a company s balance sheet or income statement. Liquidity has distorted traditional asset class and sector outperformance driven by fundamentals. As we move farther away from QE in the U.S., fundamentals will matter more in driving stock prices and more active managers will outperform their benchmarks because quality balance sheets will matter. Some of the consensus thinking on how to invest appears to be flawed. Building wealth is never easy, especially buying an index and forgetting about it. As financial advisors, I believe we need to consider all options in meeting clients investment objectives. Most importantly, making high-probability decisions and using those probabilities to overweight and underweight asset classes will, in my opinion, increase wealth over a shorter period.

5 Page 5 The opinions referenced are those of Rick Golod and are subject to change at any time due to changes in market or economic conditions and may not necessarily come to pass. These comments are not necessarily representative of the opinions and/or views of other Provasi Capital Partners LP professionals. The comments should not be construed as recommendations, but as illustrations of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from expectations. Past performance is neither indicative nor a guarantee of future results. Provasi Capital Partners LP and/or its affiliates may sponsor, co-sponsor, and/or distribute securities in investment sectors reviewed in this material. Published 7/ Provasi

First Quarter 2015 Financial Market Commentary April, 2015. Stocks Hit New Highs in a Volatile Quarter

First Quarter 2015 Financial Market Commentary April, 2015. Stocks Hit New Highs in a Volatile Quarter Hit New Highs in a Volatile Quarter Stock investors in the U.S. and around the globe had plenty to cheer about during the first quarter of 2015 as at least 17 world stock indexes set news highs due to

More information

Interest Rates and Inflation: How They Might Affect Managed Futures

Interest Rates and Inflation: How They Might Affect Managed Futures Faced with the prospect of potential declines in both bonds and equities, an allocation to managed futures may serve as an appealing diversifier to traditional strategies. HIGHLIGHTS Managed Futures have

More information

2015 Mid-Year Market Review

2015 Mid-Year Market Review 2015 Mid-Year Market Review Cedar Hill Associates, LLC www.cedhill.com 6111 North River Road, Suite 1100, Rosemont, Illinois 60018 Phone: 312/445-2900 An Affiliate of MB Financial Bank 2015 Major Investment

More information

Global Markets Update Signature Global Advisors

Global Markets Update Signature Global Advisors SIGNATURE GLOBAL ADVISORS MARKETS UPDATE AUGUST 3, 2011 The following comments come from an internal interview with Chief Investment Officer, Eric Bushell. They represent Signature s current market views

More information

Finding yield in dividendpaying

Finding yield in dividendpaying Market & Investment Insights Finding yield in dividendpaying stocks Mike Holbert, Portfolio Manager, Active Equities Article Highlights: Low interest rates have spurred investors to search for yield outside

More information

Economic & Market Outlook

Economic & Market Outlook Monthly Portfolio Commentary December 31, 2015 Economic & Market Outlook Stocks rebounded in 2015 s fourth quarter, but provided little reward for the year as a whole. The S&P 500 Index recovered from

More information

SmartRetirement Mutual Fund Commentary

SmartRetirement Mutual Fund Commentary SmartRetirement Mutual Fund Commentary J.P.Morgan Asset Management 3 rd Quarter 2014 Performance Highlights SmartRetirement s Performance Objectives The JPMorgan SmartRetirement Mutual Funds are designed

More information

TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS. Developed by Peter Dag & Associates, Inc.

TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS. Developed by Peter Dag & Associates, Inc. TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS Developed by Peter Dag & Associates, Inc. 5 4 6 7 3 8 3 1 2 Fig. 1 Introduction The business cycle goes through 4 major growth

More information

Forget Greece... Worry About China

Forget Greece... Worry About China GLOBAL INVESTMENT INSIGHT July 7, 2015 Forget Greece... Worry About China Rick Golod Chief Global Strategist Greece is a distraction with little economic impact on the Eurozone. If the equity bubble continues

More information

For high-yield bonds, market volatility can bring new opportunities

For high-yield bonds, market volatility can bring new opportunities Investment Perspectives For high-yield bonds, market volatility can bring new opportunities Kevin Lorenz and Jean Lin, portfolio managers for TIAA-CREF High-Yield Fund Article Highlights: The decline in

More information

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst White Paper: NPH Fixed Income Research Update Authored By: Bob Downing, CFA NPH Senior Investment & Due Diligence Analyst National Planning Holdings, Inc. Due Diligence Department National Planning Holdings,

More information

to Wealth Management resources of one of the world s largest financial services firms. The Caribbean Group

to Wealth Management resources of one of the world s largest financial services firms. The Caribbean Group A Defined Approach to Wealth Management Giving UWI access to the combined resources of one of the world s largest financial services firms. The Caribbean Group The information in this presentation is intended

More information

Fixed Income Asset Allocation

Fixed Income Asset Allocation Fixed Income Asset Allocation j a n n e y fixed income strat e g y While 2015 finished off with big spread widening in high yield, strong performance of our favorite sector, munis, overwhelmed losses in

More information

October 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy

October 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy October 2015 Market Volatility likely to Remain Elevated on China Growth Concerns & Fed Rate Uncertainty. Stocks

More information

High Yield Bonds in a Rising Rate Environment August 2014

High Yield Bonds in a Rising Rate Environment August 2014 This paper examines the impact rising rates are likely to have on high yield bond performance. We conclude that while a rising rate environment would detract from high yield returns, historically returns

More information

Fund commentary. John Hancock Retirement Living Portfolios Q1 2016

Fund commentary. John Hancock Retirement Living Portfolios Q1 2016 John Hancock Retirement Living Portfolios Fund commentary Seek: Long-term growth of capital or a balance between a high level of current income and growth of capital Use for: Broadly diversified, risk-targeted

More information

MLC Investment Management. Constructing Fixed Income Portfolios in a Low Interest Rate Environment. August 2010

MLC Investment Management. Constructing Fixed Income Portfolios in a Low Interest Rate Environment. August 2010 Constructing Fixed Income Portfolios in a Low Interest Rate Environment August 2010 Stuart Piper Portfolio Manager MLC Investment Management For Adviser Use Only 1 Important Information: This Information

More information

www.medirectbank.be Quarterly Report Wealth Management All content 2016 MeDirect More information visit www.medirectbank.be July - September 2015

www.medirectbank.be Quarterly Report Wealth Management All content 2016 MeDirect More information visit www.medirectbank.be July - September 2015 www.medirectbank.be Quarterly Report Wealth Management July - September 2015 All content 2016 MeDirect More information visit www.medirectbank.be In a volatile year such as 2015, a good asset manager proves

More information

2012 First Quarter Equity Market Review

2012 First Quarter Equity Market Review Investment Insights 2012 First Quarter Equity Market Review By William Riegel, Head of Equity Investments After a volatile year in 2011, equity markets grew more confident in the first quarter of 2012.

More information

Portfolio Series Portfolio Review Second Quarter 2010

Portfolio Series Portfolio Review Second Quarter 2010 Portfolio Series Portfolio Review Second Quarter 2010 We are pleased to introduce Portfolio Review, a new quarterly report on Portfolio Series. 3 Portfolio Series Income Fund 7 Portfolio Series Conservative

More information

Arup DC Pension Scheme

Arup DC Pension Scheme A presentation for: Arup DC Pension Scheme March 3 rd 2015 ARUP DC PENSION SCHEME Investment Summary 31/01/2015 Merrion Cash Fund 2,280.59 Merrion Global Equity Fund 199,535.79 Merrion Long Bond Fund 19,456.87

More information

2015Q1 INVESTMENT OUTLOOK

2015Q1 INVESTMENT OUTLOOK TTG WEALTH MANAGEMENT 2015Q1 INVESTMENT OUTLOOK TABLE OF CONTENTS Contents 2015Q1 Core Asset Allocation Summary 1 2015Q1 Satellite Asset Allocation Summary 2 2014 Year-End Review 3 Investment Outlook for

More information

About Hedge Funds. What is a Hedge Fund?

About Hedge Funds. What is a Hedge Fund? About Hedge Funds What is a Hedge Fund? A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost

More information

2016 Year Ahead - Global Investment Outlook

2016 Year Ahead - Global Investment Outlook PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy January 2016 2016 Year Ahead - Global Investment Outlook After Struggling in 2015, Global Equity Markets likely

More information

2013 global economic outlook: Are promising growth trends sustainable? Timothy Hopper, Ph.D., Chief Economist, TIAA-CREF January 24, 2013

2013 global economic outlook: Are promising growth trends sustainable? Timothy Hopper, Ph.D., Chief Economist, TIAA-CREF January 24, 2013 2013 global economic outlook: Are promising growth trends sustainable? Timothy Hopper, Ph.D., Chief Economist, TIAA-CREF January 24, 2013 U.S. stock market performance in 2012 * +12.59% total return +6.35%

More information

Q&A: Emerging Markets Challenges with Opportunities

Q&A: Emerging Markets Challenges with Opportunities Q&A: Emerging Markets Challenges with Opportunities DECEMBER 2014 / JANUARY 2015 The significant equity sell-off among emerging-market countries in the last 90 days has sparked many important questions

More information

ETF Portfolio Solutions Core Diversified ETF Model December quarter 2013

ETF Portfolio Solutions Core Diversified ETF Model December quarter 2013 ETF Portfolio Solutions ETF Model December quarter 2013 PORTFOLIO SOLUTIONS Portfolio Objective The broad investment objective of the ETF Model is to offer financial advisers an ETF-based investment portfolio

More information

Staying alive: Bond strategies for a normalising world

Staying alive: Bond strategies for a normalising world Staying alive: Bond strategies for a normalising world Dr Peter Westaway Chief Economist, Europe Vanguard Asset Management November 2013 This document is directed at investment professionals and should

More information

Blyth Fund: Fixed Income Currencies & Commodities Coverage Group May 27, 2014

Blyth Fund: Fixed Income Currencies & Commodities Coverage Group May 27, 2014 Blyth Fund: Fixed Income Currencies & Commodities Coverage Group May 27, 2014 VP: Miraj Rahematpura Associate: John Cherian Analysts: Reinier Eenkema van Dijk, Michael Limandibhratha, Ian Naccarella, David

More information

The recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong

The recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong Investment Insights The recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong Kevin Lorenz, CFA, Managing Director, Lead Portfolio Manager of TIAA-CREF's High-Yield Fund

More information

Fixed Income Asset Allocation

Fixed Income Asset Allocation Fixed Income Asset Allocation j a n n e y fixed income strat e g y Our three-pronged approach to 2015 portfolio construction has run its course, with value today found in securitized products and preferreds.

More information

Schwab Target Funds. Go paperless today. Simplify your financial life by viewing these documents online. Sign up at schwab.

Schwab Target Funds. Go paperless today. Simplify your financial life by viewing these documents online. Sign up at schwab. Annual report dated October 31, 2015, enclosed. Schwab Target Funds Schwab Target 2010 Fund Schwab Target 2015 Fund Schwab Target 2020 Fund Schwab Target 2025 Fund Schwab Target 2030 Fund Schwab Target

More information

Monthly Market Snapshot

Monthly Market Snapshot ly Market Snapshot JANUARY 2016 Key insights The New Year has begun with widespread volatility in global markets, with equities posting steep negative returns in January. The main factors driving the market

More information

Fixed Income Strategy Quarterly April 2015

Fixed Income Strategy Quarterly April 2015 Doucet Asset Management Fixed Income Strategy Quarterly April 2015 The first quarter of 2015 was a fairly uneventful one. Across the world, the pullback in yields we witnessed in 2014 continued; however,

More information

Asset Management Expertise

Asset Management Expertise Asset Management Expertise The expertise required of the financial professional depends on the nature of the job at hand. If you have handed your money to an asset manager for a specific objective, such

More information

Monthly Report for Last Atlantis Partners LLC Share Classes November, 2008

Monthly Report for Last Atlantis Partners LLC Share Classes November, 2008 Monthly Report for Last Atlantis Partners LLC Share Classes November, 2008 Performance Summary Below are summary performance numbers for Last Atlantis Partners, LLC share classes. To download detailed

More information

Wells Fargo Advantage Dow Jones Target Date Funds SM

Wells Fargo Advantage Dow Jones Target Date Funds SM Wells Fargo Advantage Dow Jones Target Date Funds SM Annual Report February 28, 2015 Wells Fargo Advantage Dow Jones Target Today Fund SM Wells Fargo Advantage Dow Jones Target 2010 Fund SM Wells Fargo

More information

Pioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.

Pioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments. Pioneer Bond Fund COMMENTARY Performance Analysis & Commentary September 2015 Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.com Third Quarter Review Pioneer Bond Fund s Class

More information

ishares MINIMUM VOLATILITY SUITE SEEKING TO WEATHER THE MARKET S UP AND DOWNS

ishares MINIMUM VOLATILITY SUITE SEEKING TO WEATHER THE MARKET S UP AND DOWNS ishares MINIMUM VOLATILITY SUITE SEEKING TO WEATHER THE MARKET S UP AND DOWNS Table of Contents 1 Introducing the ishares Minimum Volatility Suite... 02 2 Why Consider the ishares Minimum Volatility Suite?...

More information

Fixed Income Liquidity in a Rising Rate Environment

Fixed Income Liquidity in a Rising Rate Environment Fixed Income Liquidity in a Rising Rate Environment 2 Executive Summary Ò Fixed income market liquidity has declined, causing greater concern about prospective liquidity in a potential broad market sell-off

More information

Economic Snapshot January 2013

Economic Snapshot January 2013 January 2013 In summary January saw 2013 begin on a good note with strong gains on local markets. In percentage terms the Australian share market rose approximately 5%. This means the market has risen

More information

Retirement on the Brain. Market Volatility Survival Strategies

Retirement on the Brain. Market Volatility Survival Strategies Retirement on the Brain Market Volatility Survival Strategies Insight Into Market Volatility It can be exhausting to watch the financial markets as they skyrocket one day, plummet the next, rise again,

More information

44 ECB STOCK MARKET DEVELOPMENTS IN THE LIGHT OF THE CURRENT LOW-YIELD ENVIRONMENT

44 ECB STOCK MARKET DEVELOPMENTS IN THE LIGHT OF THE CURRENT LOW-YIELD ENVIRONMENT Box STOCK MARKET DEVELOPMENTS IN THE LIGHT OF THE CURRENT LOW-YIELD ENVIRONMENT Stock market developments are important for the formulation of monetary policy for several reasons. First, changes in stock

More information

THE STOCK MARKET AND BUSINESS CYCLES

THE STOCK MARKET AND BUSINESS CYCLES THE STOCK MARKET AND BUSINESS CYCLES The charts and relationships discussed in my book Profiting in Bull or Bear Markets are updated twice a month in my advisory The Peter Dag Portfolio Strategy and Management.

More information

The Impact of Gold Trading

The Impact of Gold Trading The Impact of Gold Trading By: Dan Edward, Market Analyst: FOREXYARD Date: December 2010 In this Issue: I. Introduction A brief history of gold trading II. What affects commodity prices? III. The Global

More information

Absolute return investments in rising interest rate environments

Absolute return investments in rising interest rate environments 2014 Absolute return investments in rising interest rate environments Todd White, Head of Alternative Investments Joe Mallen, Senior Business Analyst In a balanced portfolio, fixed-income investments have

More information

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 The unit investment trusts named above (the Portfolios

More information

Compass. Increased uncertainty on stock markets at the beginning of the year. Investment strategies in times of high volatility

Compass. Increased uncertainty on stock markets at the beginning of the year. Investment strategies in times of high volatility Compass April 2016 Increased uncertainty on stock markets at the beginning of the year Investment strategies in times of high volatility Caution with high dividend yields! Hedging strategies Your wealth,

More information

April 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy

April 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy April 2015 Stocks to Stabilize & Post Gains with Further Rate Cuts & Easing Measures, ECB s QE, Gradual, Modest

More information

What do rising rates mean for equities?

What do rising rates mean for equities? What do rising rates mean for equities? Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. - John Kenneth Galbraith Wall

More information

Altamont Wealth Management

Altamont Wealth Management Altamont Wealth Management Second Quarter 2013 Performance To an imagination of any scope the most far-reaching form of power is not money, it is the command of ideas. Oliver Wendall Holmes Jr. Second

More information

Documeent title on one or two. high-yield bonds. Executive summary. W Price (per $100 par) W. The diversification merits of high-yield bonds

Documeent title on one or two. high-yield bonds. Executive summary. W Price (per $100 par) W. The diversification merits of high-yield bonds April 01 TIAA-CREF Asset Management Documeent title on one or two The lines enduring Gustan case Book for pt high-yield bonds TIAA-CREF High-Yield Strategy Kevin Lorenz, CFA Managing Director Co-portfolio

More information

ECONOMIC AND MARKET COMMENTARY

ECONOMIC AND MARKET COMMENTARY OUR MISSION Smith Shellnut Wilson is a registered investment advisor* specializing in managing investment portfolios for banks, individuals, corporations, foundations and public entities. Smith Shellnut

More information

The timeless (and timely) case for high-yield bonds

The timeless (and timely) case for high-yield bonds INCOME EATON VANCE Looking beyond traditional sources of yield MARCH 2016 TIMELY THINKING The timeless (and timely) case for high-yield bonds SUMMARY High-yield bonds occupy a special capital market niche:

More information

A Strong U.S. Dollar Changes Everything

A Strong U.S. Dollar Changes Everything Schwab Center for Financial Research A Strong U.S. Dollar Changes Everything A white paper by Kathy A. Jones, Senior Vice President, Chief Fixed Income Strategist The U.S. dollar is near its highest level

More information

Are we living in a Bond Bubble? Oliver Sinnott Fixed Income Strategist April 2014

Are we living in a Bond Bubble? Oliver Sinnott Fixed Income Strategist April 2014 Are we living in a Bond Bubble? Oliver Sinnott Fixed Income Strategist April 2014 Global Financial Crisis saw debt levels soar to highest since WWII Governments were too highly indebted to significantly

More information

Looking Ahead. Looking Behind

Looking Ahead. Looking Behind Investment Commentary April 10, 2015 First Quarter 2015 Key Takeaways Looking Ahead U.S. Stocks Our five-year outlook for U.S. stock returns is quite subdued. This reflects our view that (1) corporate

More information

With interest rates at historically low levels, and the U.S. economy showing continued strength,

With interest rates at historically low levels, and the U.S. economy showing continued strength, Managing Interest Rate Risk in Your Bond Holdings THE RIGHT STRATEGY MAY HELP FIXED INCOME PORTFOLIOS DURING PERIODS OF RISING INTEREST RATES. With interest rates at historically low levels, and the U.S.

More information

The Dual Advantage of Long/Short Equity

The Dual Advantage of Long/Short Equity July 2014 The Dual Advantage of Long/Short Equity Adding an allocation to this liquid alternative strategy can help investors boost their returns while lowering total portfolio risk. Author Charles Cook,

More information

Monthly Economic Dashboard

Monthly Economic Dashboard RETIREMENT INSTITUTE SM Economic perspective Monthly Economic Dashboard Modest acceleration in economic growth appears in store for 2016 as the inventory-caused soft patch ends, while monetary policy moves

More information

TS Model Growth Portfolios

TS Model Growth Portfolios M A R K E T S C O M M O D I T I E S - C U R R E N C I E S TS Model Growth Portfolios : Q1 outlook Overview: Q1 is unfolding with minor volatility. January was a negative month on both the TSX and the benchmark

More information

Holding the middle ground with convertible securities

Holding the middle ground with convertible securities January 2015» White paper Holding the middle ground with convertible securities Eric N. Harthun, CFA Portfolio Manager Robert L. Salvin Portfolio Manager Key takeaways Convertible securities are an often-overlooked

More information

Perspective. Economic and Market. The U.S. Stock Market Resides at a Unique Global Zip Code. U.S. stock market diverges

Perspective. Economic and Market. The U.S. Stock Market Resides at a Unique Global Zip Code. U.S. stock market diverges Wells Capital Management Economic and Market Perspective November 13, 2015 Bringing you national and global economic trends for more than 30 years The U.S. Stock Market Resides at a Unique Global Zip Code

More information

Quarterly Market Review. First Quarter 2016

Quarterly Market Review. First Quarter 2016 Q1 Quarterly Market Review First Quarter 2016 Quarterly Market Review First Quarter 2016 This report features a commentary on investment discipline, the performance of globally diversified portfolios,

More information

The Fixed Income Conundrum What s your next move?

The Fixed Income Conundrum What s your next move? What s your next move? For some time, low yields have been a reality in the bond market, leading many investors to hail a new normal that is both persistent and uncharted. Government bond yields in North

More information

Investment Strategies for Pension Funds. Christopher Nichols Investment Director, Multi Asset Investing Standard Life Investments (UK)

Investment Strategies for Pension Funds. Christopher Nichols Investment Director, Multi Asset Investing Standard Life Investments (UK) Investment Strategies for Pension Funds Christopher Nichols Investment Director, Multi Asset Investing Standard Life Investments (UK) Pensions need consistency but markets deliver chaos Discrete Yearly

More information

The potential benefits of diversification

The potential benefits of diversification The potential benefits of diversification The case for diversification Over the past few years, pension schemes have faced challenging market conditions and investment performance has been mixed, leading

More information

Crafting a Forward Looking Investment Portfolio

Crafting a Forward Looking Investment Portfolio BOURSE SECURITIES LIMITED February 15th, 2016 Crafting a Forward Looking Investment Portfolio This week, we at Bourse evaluate the investment considerations and opportunities having looked previously at

More information

Down, but not out The Role of Fixed Income in a Low Yield Environment

Down, but not out The Role of Fixed Income in a Low Yield Environment Down, but not out The Role of Fixed Income in a Low Yield Environment Charles Thomas, CFA Investment Analyst Vanguard Asset Management The key questions we will answer today... What does the low yield

More information

A Solution for Yield-Starved Insurance Companies: Dividend Equities

A Solution for Yield-Starved Insurance Companies: Dividend Equities August 2015 A Solution for Yield-Starved Insurance Companies: Dividend Equities Federal Reserve efforts to normalize monetary policy are unlikely to provide meaningful relief for yield-starved insurance

More information

Commodities not finding much traction despite USD weakness

Commodities not finding much traction despite USD weakness Commodities not finding much traction despite USD weakness Commodities continued to show weakness into the second week of 2013 despite rising stock markets and a falling US dollar. Investors are generally

More information

Mawer Canadian Bond Fund. Interim Management Report of Fund Performance

Mawer Canadian Bond Fund. Interim Management Report of Fund Performance Interim Management Report of Fund Performance For the Period Ended June 30, 2015 This interim management report of fund performance contains financial highlights but does not contain either interim or

More information

Why own bonds when yields are low?

Why own bonds when yields are low? Why own bonds when yields are low? Vanguard research November 213 Executive summary. Given the backdrop of low yields in government bond markets across much of the developed world, many investors may be

More information

Asset allocation A key component of a successful investment strategy

Asset allocation A key component of a successful investment strategy Asset allocation A key component of a successful investment strategy This guide has been produced for educational purposes only and should not be regarded as a substitute for investment advice. Vanguard

More information

Outlook 2016: A Delicate Balance

Outlook 2016: A Delicate Balance leadership series DECEMBER 2015 A feature article from our U.S. partners Outlook 2016: A Delicate Balance With the U.S. and China at different stages of the business cycle, central banks must tread carefully

More information

Bob Zenouzi Discusses Delaware s Dividend Income Fund

Bob Zenouzi Discusses Delaware s Dividend Income Fund Bob Zenouzi Discusses Delaware s Dividend Income Fund October 12, 2015 by Robert Huebscher Bob Zenouzi is the lead manager of the real estate securities and income solutions (RESIS) group at Delaware Investments,

More information

Investment Strategy for Pensions Actuaries A Multi Asset Class Approach

Investment Strategy for Pensions Actuaries A Multi Asset Class Approach Investment Strategy for Pensions Actuaries A Multi Asset Class Approach 16 January 2007 Representing Schroders: Neil Walton Head of Strategic Solutions Tel: 020 7658 2486 Email: Neil.Walton@Schroders.com

More information

Cyclical Asset Allocation Quarterly

Cyclical Asset Allocation Quarterly Global Investment Strategy Cyclical Asset Allocation Quarterly January 4, 2016 Our cyclical asset allocation process is based on a rolling three-year outlook which means that the Global Investment Strategy

More information

Slide 2. What is Investing?

Slide 2. What is Investing? Slide 1 Investments Investment choices can be overwhelming if you don t do your homework. There s the potential for significant gain, but also the potential for significant loss. In this module, you ll

More information

GLOSSARY OF INVESTMENT-RELATED TERMS FOR NATIONAL ELECTRICAL ANNUITY PLAN PARTICIPANTS

GLOSSARY OF INVESTMENT-RELATED TERMS FOR NATIONAL ELECTRICAL ANNUITY PLAN PARTICIPANTS GLOSSARY OF INVESTMENT-RELATED TERMS FOR NATIONAL ELECTRICAL ANNUITY PLAN PARTICIPANTS General Information This Glossary of Investment-Related Terms for National Electrical Annuity Plan Participants (the

More information

Bond Market Momentum, Valuation and Risks

Bond Market Momentum, Valuation and Risks Bond Market Momentum, Valuation and Risks New Zealand Fixed Income Monthly Commentary August 1 christian@harbourasset.co.nz + 89 Global bond yields stabilised in July, as markets weighed up two opposing

More information

Bond Market Insights October 10, 2014

Bond Market Insights October 10, 2014 Bond Market Insights October 10, 2014 by John Simms, CFA and Jerry Wiesner, CFA General Bond Market Treasury yields rose in September as prices fell. Yields in the belly of the curve (5- to 7-year maturities)

More information

The unique value of Target-Date Funds

The unique value of Target-Date Funds The unique value of Target-Date Funds By Jake Gilliam, Senior Multi-Asset Class Portfolio Strategist supporting Charles Schwab Investment Management September, 2015 Target-Date Funds are excellent low-maintenance

More information

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income?

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income? Fixed income investments make up a large proportion of the investment universe and can form a significant part of a diversified portfolio but investors are often much less familiar with how fixed income

More information

Re-Assessing Multi-Strategy Hedge Funds Aaron Mirandon, Associate Portfolio Manager

Re-Assessing Multi-Strategy Hedge Funds Aaron Mirandon, Associate Portfolio Manager Re-Assessing Multi-Strategy Hedge Funds Aaron Mirandon, Associate Portfolio Manager { Overview } The market returns from September 2008 through mid-2010 have introduced some extraordinary market movements

More information

2013 global equity outlook: Searching for alpha in a stock picker s market

2013 global equity outlook: Searching for alpha in a stock picker s market March 2013 2013 global equity outlook: Searching for alpha in a stock picker s market Saira Malik, Head of Global Equity Research, TIAA-CREF Executive summary The outlook for equity markets is favorable

More information

INVESTMENT POLICY STATEMENT Valued Client

INVESTMENT POLICY STATEMENT Valued Client INVESTMENT POLICY STATEMENT Valued Client August 17, 2010 PREPARED BY: John Ohl Bay Colony Advisors 91 Main St STE 308 Concord, Massachusetts 01742 (978) 369-7200 John@baycolonyadvisors.com www.baycolonyadvisors.com

More information

FOMC FAQS COMMENTARY KEY TAKEAWAYS LPL RESEARCH WEEKLY ECONOMIC. December 14 2015. John Canally, Jr., CFA Chief Economic Strategist, LPL Financial

FOMC FAQS COMMENTARY KEY TAKEAWAYS LPL RESEARCH WEEKLY ECONOMIC. December 14 2015. John Canally, Jr., CFA Chief Economic Strategist, LPL Financial LPL RESEARCH WEEKLY ECONOMIC COMMENTARY KEY TAKEAWAYS The Fed holds its eighth and final FOMC meeting of 2015 this Tuesday and Wednesday, December 15 16, 2015. As of Monday, December 14, 2015, the fed

More information

INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX

INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX NAVIGATING A CHANGING INTEREST RATE ENVIRONMENT Rise to the challenge

More information

International Equities: Another Turn of the Wheel

International Equities: Another Turn of the Wheel International Equities: Another Turn of the Wheel May 6, 2015 by David Ruff of Forward Investing Non-U.S. equities have recently surged after a long spell of underperformance. Does this signal a new market

More information

Bullion and Mining Stocks Two Different Investments

Bullion and Mining Stocks Two Different Investments BMG ARTICLES Bullion and Mining Stock Two Different Investments 1 Bullion and Mining Stocks Two Different Investments March 2009 M By Nick Barisheff any investors believe their portfolios have exposure

More information

Public Equity Portfolio Overview May 29, 2013

Public Equity Portfolio Overview May 29, 2013 Public Equity Portfolio Overview May 29, 2013 Agenda Equity Markets Overview Portfolio Profile Portfolio Structure Activities/Accomplishments Global Equity Initiatives Hedged Equity Portfolio 2 General

More information

WEEKLY MARKET COMMENTARY

WEEKLY MARKET COMMENTARY WEEKLY MARKET COMMENTARY Update on Risks and Opportunities in the Financial Markets January 2015 Weekly Market Commentary Week of January 26, 2015 KEY TAKEAWAYS The latest leg up for the U.S. dollar has

More information

A case for high-yield bonds

A case for high-yield bonds By: Yoshie Phillips, CFA, Senior Research Analyst AUGUST 212 A case for high-yield bonds High-yield bonds have historically produced strong returns relative to those of other major asset classes, including

More information

Economy, Capital Markets & Strategy

Economy, Capital Markets & Strategy Sébastien Mc Mahon, CFA Economist Member, Asset Mix Committee Economy, Capital Markets & Strategy 2014 National Business Conference October 2014 1 October 23, 2014 Disclaimer Opinions expressed in this

More information

How Smaller Stocks May Offer Larger Returns

How Smaller Stocks May Offer Larger Returns Strategic Advisory Solutions April 2015 How Smaller Stocks May Offer Larger Returns In an environment where the US continues to be the growth engine of the developed world, investors may find opportunity

More information

Wild Swings in Bonds, Currencies: Are Stocks Next? By: Bryan Rich Founder FXTraderProfessional.com

Wild Swings in Bonds, Currencies: Are Stocks Next? By: Bryan Rich Founder FXTraderProfessional.com Wild Swings in Bonds, Currencies: Are Stocks Next? By: Bryan Rich Founder FXTraderProfessional.com Copyright 2015 Logic Fund Management, Inc. - Do Not Distribute or Use Without Written Permission RISK

More information

Are Unconstrained Bond Funds a Substitute for Core Bonds?

Are Unconstrained Bond Funds a Substitute for Core Bonds? TOPICS OF INTEREST Are Unconstrained Bond Funds a Substitute for Core Bonds? By Peter Wilamoski, Ph.D. Director of Economic Research Philip Schmitt, CIMA Senior Research Associate AUGUST 2014 The problem

More information

May 2010. Stock Indexes April 2010 Market Indexes April 2010. S&P 500 Index +1.5% +6.4% HFRX Global Hedge Fund Index +0.8% +2.5%

May 2010. Stock Indexes April 2010 Market Indexes April 2010. S&P 500 Index +1.5% +6.4% HFRX Global Hedge Fund Index +0.8% +2.5% May 2010 Dear Investor, April saw stocks continue modestly higher, with the S&P 500 gaining 1.5% for the month. However, the gain came amid a notable increase in volatility in the latter half of the month,

More information

CIO Flash Revisions to our 2016 global outlook Jan 25, 2016

CIO Flash Revisions to our 2016 global outlook Jan 25, 2016 CIO Flash Revisions to our global outlook Jan 25, +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH The global macro picture:

More information