The Marriage of QDIAs and Managed Volatility in US DC Plans

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.

read more

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

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.

read more

Passive Management ≠ Passive Investing

Michael DePalma (pictured) and Guoan Du Passive investments are often misunderstood. Instead of providing static positioning as implied by the label, they can be very capricious because of market and sector turbulence. To tame a passive asset, we think investors need to exert more active control over the dynamics of volatility.

read more

Reality – Expectations = Happiness

Many US investors may be disappointed when they open their account statements.  Despite the widespread news that the Dow Jones Industrial Average gained 21% in the  first 10 months of 2013, most US investors’ taxable portfolio returns were far lower—typically somewhere between 5% and16% range.

read more

Risk Management: An Ounce of Prevention

Seth J. Masters (pictured), Daniel J. Loewy and Martin Atkin They say an ounce of prevention is worth a pound of cure. But if the sickness is excessive portfolio volatility, “prevention” can entail more than one step.

read more

Washington Woes…Again

Seth J. Masters (pictured) and Dianne Lob There is no way to accurately assess the impact of the US government shutdown that began today, since we do not know how long it will last. In the past, such shutdowns have been short-lived and have not had a major economic and market impact.

read more

You’ve Got to Take Risk. So, Manage It

Seth J. Masters (pictured), Daniel J. Loewy and Martin Atkin Below-average expected returns will make it difficult for most investors to achieve their goals with traditional portfolios unless they increase stock exposure dramatically.There is a better way.

read more

Predicting Death to Find Life in Emerging Market Stocks

Over the past year, investors have become excessively cautious about emerging markets. To compensate for the additional uncertainty, many underestimate the upside potential. Paradoxically, to get a better handle on the risks, we believe they should assume the worst. By using this “pre-mortem” approach, not only do they have a better chance of avoiding disaster, [...]

read more

Time to Bench the Equity Benchmark Too?

While fixed-income investors are growing increasingly aware of the risks of benchmark-oriented bond portfolios in a period of rising rates, equity investors have recently also started to question the wisdom of cap-weighted indices. We would go even further and argue that the performance of a cap-weighted benchmark may be irrelevant for the long-term goals of [...]

read more

Beware the Dangerous Stretch for Yield

The US Federal Reserve talked in early summer about tapering its quantitative easing plan and raising interest rates—in part to stop investors from chasing yield into the arms of riskier loans. In the high-yield market, however, the conversation had exactly the opposite effect.

read more

Archives by Month:

Archives by Subject: