Investments, Financial Markets & Economy

DC Plans Slow to Adopt Liquid Alts…But Why?

A recent article on Wealth Management.com titled “Liquid Alts in DC Plans? Don’t Hold Your Breath” discusses the relatively slow adoption of Liquid Alts by defined contribution (DC) Plans relative to what Defined Benefit Plans (DB) have done. The arguments for liquid alts, as the article presents, include managing return and risk management, managing volatility, potentially greater diversification, and a strategy less sensitive to broader equity and fixed income...

Prateek Mehrotra discusses the Endowment Model of Investing with Institutional Real Estate Inc

Prateek Mehrotra, CIO of ETF Model SolutionsTM,and our affiliate, Endowment Wealth ManagementTM, was interviewed this week by Institutional Real Estate Inc.  In the discussion, Prateek talks about the history of the Endowment Model and how the Endowment IndexTM was constructed.  Listen to the podcast. The podcast is for information purposes only and should not be considered personalized investment advice. Investments involve risk of loss and may fluctuate in value.  You should...

Mutual Fund Hits Investors With Huge Tax Bill

A change in the manager and a fund’s strategy may create a huge distribution to holders of the FPA Perennial Fund managed by FPA advisors, according to a story in the Wall Street Journal today.  Because the fund has changed managers and its strategy, many of the underlying holdings were liquidated to transform the fund to its new holdings.  When mutual funds sell shares of underlying securities, the short and...

Fed Leaves Rates Unchanged This Week

This week saw one of the more widely anticipated Fed announcements in recent years as investors looked to see if the “zero” interest rate environment would begin to be put behind us.  As was widely publicized yesterday, the Fed elected to do nothing based upon concerns of an economic global slowdown. First Trust’s economic team issued a report that provides the text of the Fed’s statement, along with their...

Comments on Recent Equity Market Volatility

Bob Doll’s comments on recent equity market volatility share many of our same viewpoints: Possible reasons for recent market decline: Multi-month decline in earnings Widening credit spreads Economic weakness from China/devaluation of the Yuan Slowing growth and commodity price weakness (deflation fears) Fed Policy uncertainty Market technicals Investor nervousness, skepticism, and uncertainty Near term thoughts- China’s economy is slowing, but not enough to cause a global recession US economy...

Real assets a crucial component in endowment portfolios

Real Assets, which consist of real estate, commodities, energy, infrastructure, natural resources and master limited partnerships are utilized by many of the nation’s wealthiest endowments, but individual investors can also benefit from incorporating real assets into their portfolios. Prateek Mehrotra MBA, CFA, CAIA, CIO of ETF Model SolutionsTM outlines how real assets can provide greater portfolio diversification and protection against periods of high inflation better than traditional stock and...

S&P 500 Has Not Corrected 10% in More Than 3 1/2 Years

The S&P 500 has gone more than 3½ years without experiencing a 10% correction, according to Bespoke Investment Group. It is now the second longest stretch without a 10% correction since 1929. The longest is seven years (10/90-10/97). On average, the S&P 500 experiences a 10% correction about every 18 months, according to S&P Capital IQ. Source: First Trust’s “Factoid of the Day”.

Global ETF/ETP Assets Forecast to Surpass Hedge Funds During Second Quarter

According to ETFGI, global assets in ETFs/ETPs are expected to exceed those in hedge funds.  At the end of the first quarter, ETFGI estimates that hedge funds contained just $13 billion less than ETFs/ETPs globally.  In Q1 alone, ETFs/ETPs gained $US96 trillion, compared to just US$18 trillion for hedge funds. Reasons for this growth include an “expanding toolbox of index exposures to various markets and asset classes, including hedge...

Institutional Investors Double “Smart Beta’ Exposure

Institutional investment clients of Towers Watson doubled their allocation to smart beta strategies over the past two years to $40 billion.  The firm sees the continued strong demand for smart beta strategies broadening beyond equities, particularly in the bond market. Towers Watson’s clients include pension funds, sovereign wealth funds, endowments, foundations and insurance companies.    

Algorithmic Hedge Strategies Outperform Human Managers in 2014

According to an article on CNBC this morning, systematic hedge strategies outperformed their human counterparts in 2014.  The best performing category within the segment was managed futures strategies, which gained 15.2% for 2014.  Falling oil prices, the climbing U.S. Dollar, and declining U.S. government bond prices were cited as trends that these funds were able to capitalize upon.  The entire article can be read here.