FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
It’s Baloney To Think That Buy-And-Hold Is Dead (Morningstar)
The notion that buy-and-hold investing is dead is plain crazy, according to John Rekenthaler at Morningstar. “There never was any logic behind the ‘buy-and-hold is dead’ argument. Might it have lucked into being useful? Not a chance. Coming off the 2008 downturn, the U.S. stock market has roared to perhaps its best four and a half years in history. It has shone in absolute terms, posting a cumulative gain of 125% since spring 2009. It has been fabulous in real terms, with inflation being almost nonexistent during that time period. It’s been terrific in relative terms, crushing bonds, cash, alternatives, and commodities, and by a more modest amount, beating most international-stock markets as well. This is The Golden Age. We have lived The Golden Age, all the while thinking it was lead….
“Critics will respond that mine is a bull-market argument. That’s backward. “Buy-and-hold is dead” is the strategy that owes its existence to market results. It only appears after huge bear markets, and it only looks good after such markets. It is the oddity, while buy-and-hold is the norm.”
BlackRock Thinks Emerging Market Bond Outflows Will Continue (Investment News)
Investors have pulled $US22.1 billion from emerging market bond funds since April, according to EPFR Global. Wall Street thinks emerging market bond losses are set to get worse. “We’re not yet convinced that we’ve seen the worst in terms of flows out of emerging markets,” Jeffrey Rosenberg of BlackRock told Investment News. “We see a lot of valuation change but we see the potential for even more valuation change.”
How The Current Bond Fund Liquidation Compares To The Last Three (Deutsche Bank)
“Despite large bond outflows of -$140b since May, as a proportion of AUM they amount to only 2.9%,” according to Binky Chadha, Deutsche Bank chief strategist. “This compares to 14% in 1994-1995, 8% in 1999-2000 and 5% in 2003-2004. Also, recent outflows have only dented the substantial build up in bonds since 2009 with cumulative flows still almost a trillion dollars above trend levels.” But Chadha doesn’t think its time to load up on bonds just yet.
5 Ways Advisors Can Make The Most Of Social Media Marketing (Nerd’s Eye View)
It is important for financial advisors to realise that social media is another tool, not an alternative to, networking and referral marketing, writes Michael Kitces of Nerd’s Eye View. To make the most of social media marketing Kitces has five simple suggestions.
1. “Start Simple. Don’t look at social media as something you have to do with a giant splash all at once. It is something you can tiptoe into over time.” 2. “Listen Before You Leap. If you want some perspective on what social media is all about, and what works, start by just showing up (virtually) and listening in on the conversation.” 3. “Share what you read already.” 4. “Communicate in a manner [that’s] comfortable for you.” 5. “Schedule Yourself. If your plan is to do a little social media here and there whenever you get around to it, and you have a normal, busy financial planning practice, you’re never going to get around to it.”
Hedge Funds Are Being Forced To Lower Their Fees (The Wall Street Journal)
Hedge funds have had to cut their fees as investors have been increasingly disappointed with hedge fund returns, reports The Wall Street Journal. Hedge funds are being forced to make changes to their 2% of assets under management (AUM) and 20% of investment profits model. The WSJ writes that the average hedge fund now charges 1.6% of AUM and 18% of investment gains.
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