This comparison of ultra-short duration fixed income funds with money market and short-term bond funds helps investors understand the nuances of ultra-short duration funds and, thus, make an informed decision of whether to include these investments in their portfolios.
We believe emerging markets investment in significant size will be essential to achieving above average portfolio growth in equity markets, public or private. Currently, we believe a commitment to emerging markets should fall in the range of 25% to 30% of marketable equities and private equity.
Analysis shows the inflation hedging benefits of long-term investments in commodities, which have a low correlation over time with equities. Diversification with a broad basket of commodities is best to smooth out the volatilities of individual commodities, such as oil or gold.
In building emerging market allocations into a portfolio, investors should adopt a well-structured investment process, evaluate those allocations at the portfolio level, pursue constrained optimization techniques and use a risk model to continuously control their risk exposures.
It is interesting to note that more than 13% of equities now offer dividend yields in excess of the yield available on the average corporate bond. Could equities be a better source of income? While this is debatable, we think the discussion has merit and investors should be inclined to take more equity-like risk based on relative values.
Remain diversified within the fixed income sector, allocating assets to international and high-yield bonds where appropriate, for example, to help smooth investment performance. Opportunities exist for these sectors to perform comparatively better within the context of a rising U.S. interest rate environment.
This paper addresses how inefficiencies may be exploited to help generate alpha. This viewpoint is developed from our assertion that outperformance requires strong fundamental research and insight by skilled managers, and looks at the methods by which alpha may be extracted under the umbrella topics of Concentration, Opacity (or lack of public inf...
With growth slowly returning to the First World but decelerating in several emerging countries, macroeconomic managers now face different local imperatives, and a divergence in policy response is emerging. The seeming lack of policy coordination sometimes looks disconcerting. However, we are inclined to believe the various financial policy settings...
Earnings growth in 2Q for the vast majority of companies will likely be far below last year’s year-over-year gains. Slowdowns in both Europe and China have resulted in lower demand, to an extent, while comparisons to strong 2Q 2011 earnings results will depress year-over-year measures. We are hopeful that more meaningful earnings gains will resume ...
The prudent investor will seek to capture as many of the opportunities as might be available but will be particularly careful to define his or her real risk tolerance and need for higher returns, hopefully through a cautious evaluation of his or her individual goals and the size of the assets needed to defease them. The spectrum of possible investm...
There are many reasons to seek non-correlated investments, even if, like fastastical creatures, they are hard to find. These investments can be highly beneficial to sophisticated investment portfolios, as they provide a great deal of diversification for the dollar.
The extended slump in the U.S. housing market has created a significant opportunity for patient investors. Given the imbalance between prices (weak) and rents (strong), investors willing to participate in a buy-hold-lease strategy have the opportunity to garner attractive current income on stabilized net capitalization rates exceeding 6%, with the ...
The European Central Bank’s new policy direction has helped reduce volatility to more normal levels for this phase of the business cycle. Lower volatility could eventually reduce equity risk premiums and allow for higher stock prices. In fact, it already has. Strong U.S. economic data, record corporate profits, and falling unemployment should help ...
Rather than trying to seasonally time the market, most investors would be better served by staying fully invested unless there are fundamental reasons to reduce stock exposures. Volatility is likely, as investors weigh the ongoing debt crisis in Europe, the slowdown in China, the strength of the U.S. economy, and the resolution of the "fiscal cliff...
A long-term perspective is difficult to maintain through the roller coaster of the past 10 years. It is reasonable to wonder when we will revisit the much preferred bull market of the 1980s and 1990s. While we think world equity markets should earn positive real rates of return over the next five to 10 years, we are less certain there will be a mul...