FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisers.
An Ex-Broker Who Stole $US1 Million From Clients Is Missing (Financial Planning)
“The SEC has filed an action against an ex-broker for allegedly misappropriating at least $US1 million from some of his clients, and apparently trying to hide his actions by transferring small sums to his personal account more than 100 times,” writes Andrew Welsch.
The ex-broker, Eric William Johnson, has not been located.
This is his first violation on his BrokerCheck card, and Finra has permanently barred him from the industry. It’s unclear what happened to the money.
Stocks Suffered When Central Banks Reversed Rate Hikes (Charles Schwab)
“Market watchers tend to worry about when central banks will begin to raise interest rates, but the real risk may be whether those rate hikes have to be reversed. Over the past fives years, stock markets have suffered in several countries when central banks had to reverse course on rate hikes,” writes Jeffrey Kleintop.
The Fed and the Bank of England should learn from other countries. According to Charles Schwab analysts, both might raise rates slowly relative to past rate hikes, and will end those rate hikes at “lower levels than in the past.” They may follow the precedent set by the Bank of Canada, which increased rates by only 1% in 2010, and has kept them that way since then.
For investors, rate hikes could be a good thing — provided that they are accompanied with sustainable growth. Unfortunately, if the rate hikes “prove to be much like the others over the past five years, policy makers may be forced to lower them right back down again — and bring the stock market down with them,” writes Kleintop.
The New Non-Transparent Active ETFs Given Investors An Added Choice On Returns (Wealth Management)
The SEC recently approved non-transparent actively-managed ETFs (but they can’t officially be called ETFs). This new structure creates a hybrid mutual fund slash ETF that is more tax efficient, but cheaper than a traditional mutual fund. Additionally, it keeps the active style of the fund.
“Under the ETF type structure the ETMF produces savings because the trading costs can be transferred to the market makers and away from the fund. This alone should add to the performance of the traditional mutual fund,” writes Richard Keary.
It’s Premature To Worry About What Oil Prices Will Do To The High-Yield Bond Market (Advisor Perspectives)
“Despite all the fears of lower oil prices, the broad high-yield bond market still returned 1.2% in October 2014 as global growth subsided, in contrast to an 11.7% drop in oil prices. We believe it is premature to view the drop in oil prices as a threat to the broad high-yield bond market,” write the analysts from LPL Financial.
In fact, they argue that it’s not oil prices that are affecting the high-yield bond market, but rather the issuance surge.
Although in the past there’s been a correlation between a decline oil prices and pullbacks in the high-yield bond market, LPL Financial analysts suggest that “the cause of weakness in these cases has primarily been economic concerns with lower oil prices a result of growth fears and not necessarily a driver.”
Investors Who Use Mobile Financial Apps See Greater Returns (Think Advisor)
Investors who use mobile financial applications outperform those who do not, according to a new study by Fidelity. Greater than 40% of investors who use financial apps saw returns of greater than 20% over the last 12 months. Only 22% of their “low-tech counterparts” said the same thing.
70% of those who use financial mobile apps believe that “this gives them an advantage over other investors,” reports Janet Levaux.
Additionally, 56% of survey respondents to investing tasks on mobile financial apps, including research and charting, fundamental research, reading analyst reports, and trading at least one time per month, according to Levaux.
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