FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
SHILLING: Here Are My 9 Investment Picks For A Risk On Environment (A Gary Shilling’s Insight)
Gary Shilling thinks we’re still in a ‘risk on’ investment climate. With that in mind he lists nine investments he thinks are attractive. Here they are verbatim: 1. Treasury bonds; 2. Selected income-producing securities; 3. Small luxuries; 4. Consumer staples and foods; 5. The dollar against the Canadian dollar; 6. Selected healthcare providers and medical office buildings; 7. Low P/E stocks; 9. Productivity enhancers; 9. North American energy producers. Meanwhile, Shilling thinks certain commodities, especially copper, are unattractive.
Shilling has also removed his short on the Australian dollar and emerging market stocks and bonds. Shilling insists that “serious problems remain” in emerging market nations he identifies as goats, namely countries like Turkey, India, South Africa, Indonesia, Argentina and Brazil, that have current account deficits, weak currencies, high inflation and other characteristics binding them together. “But investors at present seem convinced that the crises are over.”
How Advisers Can Prevent Clients From Making Poor Investment Choices (The Wall Street Journal)
A look at any 20-year period shows that the average actively managed fund grows about 9% annually, writes Leo Abel, founder of Abel Advisors, in a new Wall Street Journal column. But investor returns in those funds can be as little as 4%. This is because clients often end up panicking or chasing trends, or it can also be because of over and under-diversification he writes. When clients make such decisions, Abel thinks its important for advisors to say three words “Don’t do that.”
“Our job as advisers isn’t to time and outperform markets for our clients. Instead we should help clients realise what we can do. We can clarify their financial goals, align their resources toward the realisation of those goals, and create portfolios that give them a high probability of success. We can also encourage positive behaviours like patience, discipline, and faith in the future.”
Three Things Investors Need To Consider In A Rising Rate Environment (BlackRock Blog)
In her latest press conference, Federal Reserve Board Chair Janet Yellen, provided guidance that short-term rates would be held low for about six months after it ends its monthly asset purchases. Expecting interest rates to rise, investors have poured into “floating rate debt and short duration funds in the past year and a half, writes Matthew Tucker at BlackRock. He thinks bond investors should remember three things when thinking about rising interest rates.
1. “Beware the middle of the yield curve” — “We are practicing caution within the short to middle part of the Treasury curve and are underweight Treasury bonds with three- to seven-year maturities.”
2. “The tails of the curve may provide more value” — Bonds with very short maturity are less likely to be impacted by Fed policy and those with longer maturity have done well so far this year.
3. “Consider tax-exempt munis and emerging market debt” — “We are currently overweight munis due to strong credit fundamentals, and are neutral to emerging market (EM) bonds overall.”
Watch $US52.1 Billion Leave PIMCO’s Flagship Fund (Morningstar)
Recently, news about PIMCO has centered around Mohamed El-Erian’s exit and the work culture at the bond fund giant. But new data from Morningstar shows that PIMCO’s Total Return Fund, the flagship fund managed by Gross, has fallen behind 85% of its competitors. The fund saw $US3.1 billion of net outflows in March, and cumulative outflows since May 2013 are $US52.1 billion.
Retirement assets climbed to a record high of $US16.64 trillion at the end of 2013, according to a study by Spectrem Group. A breakdown showed that private sector retirement assets totaled $US7.85 trillion, IRA plans totaled $US6.20 trillion, public sector retirement assets totaled $US3.97 trillion, and 403(b) plans totaled $US985.4 billion. 403(b) plans refer to retirement plans for employees of public schools and non-profits. George H. Walper Jr, president of Spectrem Group, said this is a good sign for the future retirement security of U.S. workers, reports FA Mag.
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