FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
A bond fund alternative has been crushing it (Investment News)
The Schooner Hedged Alternative Income Fund is up 12.7% so far in 2015. How is it outperforming the S&P 500 by almost four times? The fund uses a risky strategy of selling put options of between 100 and 200 securities. Greg Levinson, president and chief investment officer of Schooner Investment Group admitted to Investment News, the current environment is optimal for the income-generating strategy because it takes advantage of the cautious sentiment of investors. The fund is “required to hold enough cash to purchase the stocks to meet any put option requests,” according to Investment News.
Stocks have been quiet in 2015 (Bloomberg)
The S&P 500 has experienced a lacklustre 2015, gaining 3.2% year-to-date. Bloomberg’s Callie Bost and Joseph Ciolli report the benchmark index hasn’t finished up or down at least 2% since December 18. According to the duo, “The last time the gauge went without a 2 per cent move in the first half of the year was in 2005.” Volatility is likely to remain low if Greece and its creditors are able to come to terms on a new debt deal.
Will activism last? (Wealth Management)
Activist investors have been all the rage lately, moving into beaten down names and putting the management under pressure to make big changes. Data provided by HFR shows activist funds grew their assets under management by $US3.9 billion in the first quarter, upping their total to $US127.5 billion. The space has outperformed so far in 2015, up about 6%, compared to the 3.2% gain seen in the S&P 500. Phil Goldstein of Bulldog Investors told Wealth Management, “As long as the stock market goes up you’ll see these strategies do well, but if you see liquidity dry up, you could see huge back up in the performance of the funds.”
SEC is reviewing retirement advice (Think Advisor)
The Securities and Exchange Commission announced it has begun a multi-year review of broker practices related to the sale of retirement products. Think Advisor’s Melanie Waddell says the SEC will focus on “whether these RIAs and broker-dealers have reasonable basis for recommendations, whether they are disclosing conflicts of interest and whether proper supervision and compliance controls are in place, as well as marketing and disclosure of products.” Other areas that will be looked into include the type of due diligence advisors do before making a recommendation, how consistent brokers are when making initial recommendations and how advisors service their clients accounts.
SEC bars two for insider trading (Financial Advisor)
Matthew G. Teeple of Artis Capital Management and John V. Johnson of The Boston Company Asset Management have been barred from the financial industry by the Securities and Exchange Commission for their trading of non-public information related to Foundry, a publicly traded technology firm that was later sold. According to Financial Advisor’s Karen Demasters, the scheme netted “$US16 million in profits and prevented another $US11 million in potential losses.”
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