Bond Investors Should Watch Out for the Flavor of the Month

Rising rates and inflation aren’t the biggest risks high-yield bond investors face today. We think the larger concerns are concentration and crowding stemming from low liquidity.

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Pick and Mix: Fresh Ideas for Diversifying Bond Exposure

Policy backdrops and growth trajectories around the world are showing increasing signs of divergence. Yet many bond investors continue to congregate in a few selected pockets of the fixed income universe. In our view, it’s a perfect time to reconsider diversification tactics.

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Building a Better Passive Mousetrap

Michael DePalma (pictured) and Richard Abramson In a recent blog, Passive Management Does Not Equal Passive Investing, we showed how passively managed portfolios actually create an active investment in which volatility isn’t benign and risk exposures can vary wildly over time. So if we could fix the problem and reduce exposure to spikes in market [...]

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Lessons Learned in 2013

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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Extreme Makeover for US Retirement Plan Menus?

We’ve heard rumblings in Washington: to fix America’s retirement problem, some argue we need to replace the whole defined contribution (DC) system; others say it just needs some targeted changes. We agree with the latter. A good place to start is a sensible rethinking of DC plan menus.

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Keeping Your Balance During Shaky Markets

By Paul DeNoon (pictured) and Gershon Distenfeld While capital markets have had their ups and downs, it’s been at least 15 years since we’ve seen such a broad swathe of the global markets take a hit at the same time—risky and “risk-free” assets alike.

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Managing Equity Risk: Some Rules for the Road

Under the surface of May’s strong equity returns were major shifts in sector leadership, notably a rotation from defensive to traditional cyclical sectors. Given the market’s tendency to change gears, it helps to be flexible in managing portfolio risk. In fact, it should be a daily exercise.

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Beware of the New Systemic Risk

Michael DePalma It felt like there was nowhere to hide from the market declines last Monday, April 15, when stocks, bonds and commodities fell in unison across the world, well before the Boston bombings that day. We believe that this failure of diversification was instigated by increasingly powerful multi-asset funds, many of which use leverage, [...]

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Emerging-Market Debt Offers More than One Kind of Diversification

One key attraction of emerging-market debt is that it can help investors to diversify existing portfolios of developed-market fixed-income securities. But there’s more than one kind of diversification, and more than one way to approach the opportunity, depending on each investor’s objectives.

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Reducing the Risk from Adding Stock Exposure

Adding other sources of diversification could significantly reduce the risk from increasing stock exposure, our research suggests.

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