FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
For Bond Investors, These Risks Might Be Worth Taking (Advisor Perspectives)
“We think bond investors are not adequately compensated for taking on interest-rate, credit or liquidity risk in the current market environment,” writes Kathleen Gaffney of Eaton Vance in Advisor Perspectives. “This begs the question: What risks are worth taking in the bond markets if these traditional risks are overvalued?”
“…While we think traditional risks in the bond market as a whole may be expensive now, we reason that focusing on idiosyncratic risks, or unique factors of specific issuers, may aid in finding value in today’s bond markets. Capitalising on such opportunities requires in-depth understanding of the fundamentals of issuers.
“We think careful analysis of issuer-specific risks may help uncover income opportunities. Specifically, we think non-U.S. debt (such as emerging-market debt), commodity-related debt issued by companies and countries, and so-called “fallen angels” in the high-yield space may be attractive options for investors to consider.”
The Wealthy Should Probably Keep Mum About Their Finances (The Wall Street Journal)
“The smartest thing for the wealthy person to do is not to say anything about their wealth,” Robert Dilenschneider of Dilenschneider Group Inc told Daisy Maxey at the WSJ. Hilary Clinton recently caused a stir when she said her and her husband, former president Bill Clinton were “dead broke” and in debt when they left the White House.
“Comments about financial status that are incorrect, misunderstood or too revealing can prove troublesome for anyone. But for the very wealthy, these can harm their public image or career, attract Internal Revenue Service scrutiny or–in a worst-case scenario–put them in danger,” writes Maxey.
Janet Yellen Takes Dead Aim At Social-Media Company Valuations (Business Insider)
Federal Reserve chair Janet Yellen delivered her semi-annual monetary policy report before the Senate Banking Committee on Tuesday. Ahead of the statement we got the full report to Congress in which Yellen warned that valuations of certain stocks are stretched. “…Valuation metrics in some sectors do appear substantially stretched — particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year,” she said.
Yellen however pointed out that the broader stock market does not seem overvalued. “Some broad equity price indexes have increased to all-time highs in nominal terms since the end of 2013. However, valuation measures for the overall market in early July were generally at levels not far above their historical averages, suggesting that, in aggregate, investors are not excessively optimistic regarding equities.”
$650 Million Broker Team Leaves Morgan Stanley (Investment News/Bloomberg)
Four Morgan Stanley brokers with $US650 million in client assets have left to set up Encompass Wealth Advisors, reports Bloomberg. “The team left Morgan Stanley’s Portland office today and immediately set up Encompass Wealth Advisors using trading systems, research, lawyers and office space arranged by Tru Independence LLC, also based in Portland,” reports Bloomberg.
“Mr. Stuvland’s is the latest in a growing number of firms that help wealth advisers leave large banks and go it alone. Dynasty Financial Partners LLC, founded in 2010, has 22 companies that manage $US21 billion using its system. HighTower Advisors LLC in Chicago and Focus Financial Partners LLC in New York also work to pry brokers out of big firms.”
Schwab Charitable reports that donors grants climbed 38% year-over-year rise to $US822 million and went to over 34,500 charities in fiscal 2014. “Our donors have absorbed the new tax policies that took effect in 2013 and they are encouraged by an improving economy and a strong stock market,” Kim Laughton, president of Schwab Charitable told FA Mag. “As a result, they are increasing their giving and supporting a wide range of causes.”
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