Don’t Paint Yourself into a Corner with Overly Defensive Strategies
Popular strategies for hedging against deflation and hyperinflation are likely to be disastrous if the economic outlook grows more benign as we expect.
Read MoreThe Bigger Picture on US Jobs
Last month, I explained why weak US jobs numbers for March shouldn’t be taken at face value. Since then, we’ve had another month of disappointing employment data—and I have some more evidence to suggest that the underlying trends are better than you might think.
Read MoreRules of the Game Have Changed for Euro High-Yield Investors
The European sovereign debt crisis has changed the rules of the game for euro high-yield investors. Jørgen Kjærsgaard, who manages our euro high-yield portfolios, argues that fixed-income managers are being challenged to think differently about both the risks and the opportunity set. And they are having to adapt to a number of shifts in the euro-area high yield landscape.
Read MoreGlobal Bonds: Avoiding Unintended Consequences
More and more, global bonds are being used as core portfolios for investors seeking an anchor to windward for their stock investments. While this is generally a good thing, some investors are discovering that the decision to go global can have unintended consequences: certain global bond portfolios have much higher volatility than is usually associated with core portfolios.
Read MoreFees Matter a Lot, but They’re Not All That Matters
The US Department of Labor’s new fee-disclosure rules for defined contribution (DC) plans will provide participants with much more information on plan and investment-option fees. That’s good. But there’s a real risk that it may unintentionally drive participants toward making poor investment decisions, as my colleagues Mark Fortier and Daniel Notto explain below.
Read MoreDon’t Blame Theory for the Credit Crunch
A paper published this week entitled The Death of Common Sense: How elegant theories contributed to the 2008 market collapse has garnered a fair bit of coverage in the financial media, resulting in headlines such as “Modern portfolio theory failing institutional investors” in Investment & Pensions Europe. But is it really true that theory led practitioners up the proverbial garden path?
Read MoreAllocating to Hedge Funds Should Be a Two-Step Process
The experience of two bear markets in the past decade reminded investors of the importance of diversification. This, coupled no doubt with some envy of the “endowment model” of the likes of Yale and Harvard universities, has caused many to increase their allocation to hedge funds. While this often makes sense, we think it’s important that investors set their expectations appropriately.
Read More“Bad Bank” Unlikely to Solve Spain’s Banking Problems
As Spain slips back into recession, the Spanish government has begun talks on ring-fencing the country’s bad property loans in one or more separate entities. While this may help, we doubt whether the move will be enough on its own to solve Spain’s problems, as our European banking analyst, Victoria Norman, discusses below.
Read MoreSpanish Jitters Reveal Euro’s Fragility
Yields on 10-year Spanish government bonds have risen by 100 basis points since the beginning of March. With attention now switching back to Spain, it seems the brief hope provided by the European Central Bank’s massive liquidity injections has proved to be a false dawn. Why has confidence evaporated so quickly?
Read MoreMoving Beyond Municipals
Taxable US investors usually invest the fixed-income part of their portfolios in municipal bonds. But a tax-aware strategy with the flexibility to look for the highest after-tax return across sectors is likely to be more rewarding over time, as my colleague Terry Hults explains below.
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