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Dan Ivascyn, deputy CIO at PIMCO and Alfred Murata, managing director at PIMCO, were named Morningstar’s 2013 fixed-income managers of the year. Murata said there are three themes PIMCO exploits in its income strategy.
1. Flexibility – “Instead of managing the portfolio with a goal of outperforming a particular benchmark, we construct the portfolio with the goal of achieving our objectives of generating attractive income, capital appreciation and capital preservation.”
2. Harvesting global opportunity – There are valuation differences across the globe both within and between asset classes.
3. Protecting capital – This can be done by picking assets “that are senior in the capital structure” and expected to be more “resilient.” It can also be done by investing in assets that could appreciate if economic developments sour.
Alternative Investments Are Growing, Albeit Slowly (WealthManagement.com)
70% of retail managers think alternative products will be as important or more important than other products, according to Cerulli. Alternative mutual funds account for 2.8% of overall mutual fund assets now, but Cerulli thinks that figure will growth to 9.7% in five years and 15.8% in 10 years, write Diana Britton in WealthManagement.com.
From Cerulli: “Indeed, Cerulli has heard time and again that the primary challenges for managers looking to capitalise on the demand for alternatives stem from creating trusting relationships with financial advisors and providing them education on effectively employing alternatives within their clients’ portfolios — this is not a “build it and they will come” scenario.”
Deutsche Bank is out with a chart that shows year-to-date returns of every major asset class in the world. Some assets that did well last year are in correction, like Japanese stocks. While others that took a blow last year are doing well, like gold.
The Financial Industry Regulatory Authority (FINRA) has approved a rule that makes it harder for brokers to have their record wiped clean. FINRA has passed a rule preventing firms from making conditions on settlements, or compensating customers, if they agree not to oppose a request to expunge information from a registered person’s Central Registration Depository (CRD) record. The records are publicly available.
“We continually make improvements to the arbitration and expungement process to further enhance investor protections,” FINRA chairman Richard Ketchum said in a press release. “FINRA feels strongly that expungement of customer dispute information shouldn’t be “bargained for” through settlement negotiations or otherwise.”
Why It’s Different This Time In Emerging Markets (Deutsche Bank)
We’re seeing turmoil in emerging markets, and many are drawing parallels between the current rout and the 1997-98 Asian financial crisis. But in their latest house view presentation, Deutsche Bank analysts explain why emerging markets are better equipped this time around than they were back then.
1. Local currency debt is more common so “FX depreciation is less of an issue from an external financing point of view.”
2. There’s less current account vulnerability.
3. Emerging markets have higher foreign reserves.
4. “Substantial reduction in the use of managed FX regimes means currency adjustment is not compressed in single, destabilizing moves, but done gradually.”
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