Lessons Learned in 2013

Seth J. Masters

In 2013, interest rates rose, bonds fell, equities soared, and US income-tax rates climbed higher. Before starting to place bets for 2014, investors would be wise to think about some important lessons from 2013.

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Detroit and Illinois Work Toward Resolving Their Issues

Michael Brooks

Recent negative news about Detroit’s bankruptcy and Illinois’s pension overhaul has raised fears about the poor financial health of many cities and states. And it’s shaken individual investors’ confidence in municipal bonds. Just how worried should investors be? Not very, in our opinion, as bond defaults remain very rare. In fact, we view recent events in Detroit and Illinois as positives for the market.

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Want Safer Yield? Cycle to Europe

Gershon Distenfeld

Gershon Distenfeld (pictured) and Jørgen Kjærsgaard

For high-yield investors with large US credit exposures, these are uncertain times. The pricing of securities is becoming more volatile, spurred by interest-rate volatility, and companies are borrowing more, causing concern about their future creditworthiness. The solution, in our view, is to diversify—and we regard the European high-yield markets as attractive.

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Patterns of US Economic Recovery Suggest Faster Growth Ahead

Joseph G. Carson

Recoveries from past financially driven recessions have tended to be slow, and so far the current US recovery is following that pattern. But abundant liquidity and fading headwinds suggest to us that growth is likely to accelerate.

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SMID-Cap Rally Has More Runway

Bruce Aronow

After the eye-popping outperformance of US small- and mid-cap (SMID) stocks this year, investors are asking why they should buy them now. We say, why not?

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The Marriage of QDIAs and Managed Volatility in US DC Plans

Daniel J. Loewy

Probably the best way to connect US defined contribution (DC) plan participants with the angst-reducing benefits of managing volatility is through a plan’s qualified default investment alternative (QDIA)—especially if the QDIA is a target-date fund.

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Bank of England’s Growth Focus Might Stir Inflation Ghost

Darren Williams

The Bank of England appears to have moved the goalposts. After 30 years of focusing almost exclusively on inflation, monetary policy is now being more explicitly directed toward generating faster growth and lower unemployment.

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Another Step Forward for US DC Plans: Managing Volatility

Daniel J. Loewy

We’re seeing more US defined contribution (DC) plan sponsors looking at a variety of ways to help their participants manage volatility—and the accompanying anxiety and doubts that can often push participants to abandon their long-term investing goals.

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Supersize EM: Obesity Matters for Emerging-Market Investors

Sammy Suzuki

Modern lifestyles are closely linked to rising obesity. As emerging markets follow the lead of the US, expanding waistlines could provide a guide to consumption-related investment trends in emerging markets.

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Dig Deep—Then Dig Some More—to Uncover Risks in EM Corporate Debt

Shamaila Khan

Emerging-market (EM) corporate debt returned big numbers for investors in recent years, as the sector rode a general wave of optimism about the future. But those days are gone. In 2013, successful investors have had to take a more painstaking path.

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