Results 101–150 of 282 found.
Hedge Funds on the Comeback?
A few days ago I stumbled across a post from CIO titled Reports Of My Death Have Been Greatly Exaggerated that chronicles the outflows from hedge funds last year and posits whether a comeback might be around the corner but with generally lower fees. The lower fee angle of the article seemed to focus on negotiating a lower fee with the manager. Of course lower fees are available through the various exchange traded products that one way or another replicate the exposure but doing so without the so called ‘2 and 20’ fee structure.
High Yield in a Rising Rate Environment: Duration and Yield
We began February with a yield on the 10-year Treasury of 1.68% and today sit at 2.14%.1All the concerns and talk of maybe even no rate rise this year that we saw in January, have turned to frequent mention of a rate rise beginning in June. So what are bond investors to do? Is this finally the year of rising rates and what impact does that have?
Loan Fund Primer
Last week the Riksbank (the Swedish central bank) dropped its benchmark interest rate to -0.10 and as of earlier this week Sweden’s ten year sovereign debt was yielding 0.50%. So Sweden is now the latest country to make headlines about extreme central bank policy to stimulate growth.
Alpha Generation for Active Managers
As we discussed in our recent blog (see “The Opportunity in Volatility”), we are currently seeing a lot of attractive opportunities in the high yield market—discounts and yields that we haven’t seen in some time. And while we have seen the yields in the high yield indexes and the products that track them increase over the last six months, they don’t really seem to reflect the true opportunity we are seeing in the market.
The Opportunity in Volatility
While 2014 was characterized largely by the lack of volatility for most the year, and active management suffered as a result, we see those tables turning in 2015 as we expect this volatility to continue. As we sit today, we see an attractive entry point into the high yield market for active managers who can parse through the space to determine where there is value to be had, and where there are value-traps.
The Trouble With Zero
We have watched the decline in crude noting the slow decline that started in June that then turned into a crash starting at around $75 at Thanksgiving. The circumstances of crashes are always “different” but the market action is very similar almost every time and the oil market is showing the same pattern for now.
Retirement Realities and Contingencies
Stites on Estates took an interesting look at retirement intentions versus retirement reality along with a reiteration of the dismal statistics about how little savings people who are working have accumulated as well as how few dollars people have put away when beginning their retirement.
The Benefits of Proper Risk Budgeting
William J. Bernstein had an interesting op-ed in the Wall Street Journal titled How To Tell If Your Retirement Nest Egg Is Big Enough. Anytime the term nest egg pops up in a post I feel compelled to make the Lost in America reference when Julie Hagerty loses the nest egg at the tables in Las Vegas almost immediately after they hit the road and Albert Brooks tells her to never use the words nest and egg in the same sentence ever again.
11 Investing and Personal Finance Hacks
You?ve probably seen one or two of the listy articles about life hacks which are little tricks that can make the day to day routine a little easier. Some are for very mundane aspects of life like using a paper clip to mark the spot where the roll of tape starts or laying a wooden spoon across a pot of boiling water to prevent it from boiling over. I saw one of these lists a few days go where one of the hacks was a little off the beaten track, suggesting you always carry bolt cutters with you.
High Yield Bonds versus Equities
Investors are often led down the path that they must invest in equities in order to generate a decent return, and that the high yield market is too risky and speculative. However, reality and the data points suggest otherwise. Looking over the past couple decades and various periods in between, you can see that high yield has outperformed the equity market (as measured by the S&P 500 Index) on a risk adjusted basis (return/risk) over the past 5, 10, 15 and 25 years, and performed equivalently over the last 3 years.
Barron?s Makes The Case For Active Management
The Barron?s cover story made the case for active management outperforming passive indexing when interest rates rise citing the history that supports the notion from past periods of rising rates with the underlying logic being that ?rising rates go hand-in-hand with outperformance of smaller stocks, which active managers tend to favor? as well as part of active management including what to avoid which is a concept we have discussed here many times before.
How Can The Bond Bull Keep Going?
In our Weekly Market Update we have made an effort to track the deflationary story being told in the global fixed income markets, specifically sovereign yields have continued to trade lower defying what most investors thought was possible; Swiss 10 year debt recently yielded 25 basis points. A while back I quoted a Seth Klarman Tweet about German debt trading at multi-century low yields.
MLPs Werent Supposed To Decline
Most income investors will know at least a little about Master Limited Partnerships more commonly referred to as MLPs. Most MLPs are tied to the transportation of energy products. They collect royalties as the energy product moves through their pipeline (this is a very common structure). Fundamentally, the movement of MLPs should not be vulnerable to price movements of the underlying energy product. The royalty collected is what it is.
Jorge Posadas (Financial) Slump
Add Yankee great, Jorge Posada to the long list of names of professional athletes who have been done in by their investment advisors. There are of course several accounts of this around the web but according to the NY Post he lost millions on a real estate deal and in a hedge fund run by his advisors. The Post implies he has not been totally wiped out but that Posada and his wife, who are referred to as nave in the article, have taken a meaningful blow to their net worth.
Does Victory For Abe Mean Defeat For The Yen?
Prime Minister Shinzo Abe prevailed on Sundays snap election which will give Abe a fresh mandate to implement his policies to revive Japan from its prolonged well chronicled economic malaise. There was no way Abenomics wasnt going to continue since Abes LDP party had 352 candidates to the opposition Democratic Party of Japan fielding only 198 candidates for the 475 seats up for grabs.
If Corporate America Is Investing in Sustainability, Then Why Arent You?
Unfortunately, thirty seconds in an elevator or hallway is not enough time to build the case for sustainability. But here on AlphaBaskets, were afforded the space and time to better explain why Sustainability should matter to them, and you.
Grandma Got Run Over By A Dividend Portfolio
Forbes had a very short article titled High Yield Grandma which offers a brief profile of a woman who has overcome a few setbacks and has a very substantial investment portfolio worth $3 million. As the clever title implies she focuses on dividend stocks.
Examining the Correlation between Oil and Gold
Crude Oil and Gold have generally exhibited a positive correlation (meaning they move in tandem) for the past 7 out of 10 years. In general both fall in the commodity asset class and are commonly used by investors as an inflation hedge as well as for portfolio diversification. As inflation increases, both commodities will tend to follow suit.
Whos Really in The Kingdoms Gun Sights?
According to the EIA, U.S. crude oil imports averaged about 7.3 million barrels per day last week with Canadian barrels making up 3.2 million barrels of the total. U.S. commercial reserves increased by 1.9 million barrels week over week where total inventories fell 3.7 million barrels versus expectations of a build of 950,000.3 Are we at the beginnings of a rebalancing of the market? Possibly.
The All Everything Portfolio? No Such Thing
Barry Ritholtz has had some good fun torching Tony Robbins All Weather Portfolio for having too much in bonds and commodities as well as being to backward looking and being put forth as a one size fits all. The latest was in his WaPo column dated December 5, 2014.
Right for the Wrong Reason
It has been a poorly kept secret that I am among the biggest skeptics in the planet as it relates to this whole US energy independence fantasy. As a credit investor, I have been no bid on the entire US E&P business. This was not an easy thing to sidestep as energy as a sub-set is by far the largest component of the various high yield indexes representing around 18%1.
What the Swiss Gold Vote Means to the Capital Markets
As expected, Swiss voters rejected a proposal Sunday to increase the Swiss National Bank (SNB) gold holdings to a mandatory 20 percent of its foreign exchange reserves. The Save Our Swiss Gold proposal was voted down by 77 percent to 23 percent which was a larger margin than what polls had indicated. The SNB had campaigned against this referendum initiated by the European Union-skeptic right wing Swiss Peoples Party which falsely argued that this would have strengthened the SNBs credibility.
Learning From Mistakes Made By Pension Funds
Forbes took a look at How Pension Funds Make Investing Too Complex. The issue was hedge funds and private equity funds that tend to be expensive, opaque or both. These types of direct investments also tend to be illiquid in terms of having long waiting periods before investors can get their money out.
Active Investing: Opportunity in Gold
As active managers, we embrace both a top down and bottom up investment philosophy as we look for opportunities for investment. One such potential opportunity we are seeing from more of a top down, thematic approach is in gold.
Experts Weigh In On Solving Retirement
There were a couple of very interesting retirement articles posted last week that are worth pointing out. The first on was from the LA Times and focused on research and comments on the research from Alicia Munnell from the Boston College Center for Retirement Research which, cutting to the chase, concludes most people will not have the retirement they hope for in financial terms.
Gold Gets Physical
Its happening again the gold cost of carry as defined by the one month gold forward rate has swung sharply into negative territory. This means that an investor is able to earn a positive carry from owning gold. This is unusual for gold markets and a relatively rare occurrence the more common scenario is that because of the storage costs associated with gold, an investor would expect to have to pay a cost of carry to hold gold. Prior to the instance in July 2013, the last time that gold forward rates went negative was in November of 2008.
Buyer Beware: Nowhere To Hide
The price/sales ratio is often used as a valuation metric in the place of earnings because of the common belief that revenues are harder to manipulate than earnings. In my book, Whats Behind the Numbers? (McGraw-Hill, 2012), I debunk that theory and outline many ways that management teams can aggressively manage the top-line. Nevertheless, the price/sales ratio is useful because there are fewer inputs, such as reserves, tax issues, share buybacks, and recurring charges, than earnings that can be used to manage the reported results.
A Yield Play Without Any Yield?
On Friday a recently launched IPO fell about 15% on an earnings report that was poorly received by markets leaving the stock down 39% since its first day of trading in June. Naming names becomes difficult for compliance reasons but as a hint it is an infrastructure name and you would probably need to read the name two or three times to figure out the word.
Volatility and Risk
Volatility has seemed to be the trend in markets over the past couple months. It was just a few weeks ago that we saw equity markets getting crushed, only to roar back and actually finish up for the month of October and back near all-time highs. It makes no sense to us that investors have no problem dealing with volatility in stocks, investing for the long run, as the stock market has historically gone up, but with the high yield asset class, we often see the risk on or risk off mentality, meaning investors think they should either be fully invested
Portfolio Effects of Holding Gold in Yen Terms
Last week in Gold in Yen Calm in the Eye if the Storm we focused on the factors behind the significant outperformance of gold priced in yen versus gold priced in dollars, identifying the strength of the dollar as the primary factor pushing down the price of gold in dollars. While on the currency side, the strength of dollar resulted in significant weakness in the YEN/USD FX rate.
Buyer Beware: Jobs? WHAT Jobs?!
While many market observers debate whether quantitative easing (QE) worked the general consensus appears to be that the lower unemployment rate is a positive result of the Federal Reserves policies. Recently the unemployment rate hit 5.9%, the lowest since 2008. However, in our view, that is highly misleading with respect to the effectiveness of QE. The chart below shows the labor force participation rate as well as the percentage of people employed relative to the population.
Gold in Yen Calm in the Eye of a Storm
Since the beginning of August there has been a striking divergence in the relative performance of gold priced in US dollars versus gold priced in yen. Gold in yen has outperformed its dollar cousin by just over 10% over a period of three months. In fact year-to-date gold priced in yen has returned +5.3% with a 10.7% annualized standard deviation while gold in dollars has returned -2.6% with a 12.5% annualized standard deviation.
Election Impact on Oil
The tally is in and it was a very bad evening for the Democratic party. Senate races in Iowa, North Carolina, Georgia and a host of other States went red. Alaska is still to be determined (likely Republican) and Louisiana is slated for a run off. All told, it looks likely the Republicans have garnered a solid majority in the Senate (up to 53-54 seats) and the biggest majority in the House (over 246 seats and counting) since Truman 60 years ago. This certainly seems to have surpassed the nightmare scenario envisioned by the Dems. While the markets may enjoy a honeymoon rally, it always fades.
Buyer Beware: A Notable Divergence
As a short selling portfolio manager, we constantly monitor market relationships for positive or negative divergences in the broad equity market indexes. One of the most important relationships is that between price and volume. In a bullish scenario, one would want to see volume expand as price rises.
How Exchange-Traded Futures Can Improve the Efficiency of Gold & Currency Linked ETFs
With a number of gold and currency linked ETFs now using exchange traded futures to gain their gold and currency exposure versus the alternative of holding physical gold/hard foreign currency, we discuss below some of the key features of these futures markets which, in our view, mitigate most if not all of the concerns investor may have about these futures based ETPs.
Risk Aversion on the Rise Gold Back in Vogue
In this weeks commentary we present a simple methodology for measuring the amount of risk aversion in gold markets. This measure of risk aversion (which we define below) compares the variability of observed gold prices versus the variability that can be implied from gold option prices.
Investing by Duration
It was hard to ignore the call in the fixed income space for short duration investing over the last couple years. Duration is a measure of interest rate sensitivity (the percentage change in the price of a bond for a 100 basis point move in rates), so the lower the duration the theoretically less sensitive those bonds are to interest rate movements.
Optimizing a Portfolio Allocation to Gold
Gold continues to be an attractive asset class that many investors wish to hold in their portfolios primarily for its diversification benefits and defensive characteristics during periods of high risk aversion in global markets. And notably many investors gain their gold exposure via exchange traded products given the ease of access, liquidity and the transparency they offer, particularly to retail investors who historically faced numerous barriers to holding gold in their portfolios.
Bullish on Gold Priced in Euro Gold Priced in Dollars, Not So Much
In this weeks discussion we revisit our earlier analysis looking at the relationship between the gold price and real interest rates. Over the last three months the gold price in dollar terms has fallen 9% moving briefly below $1,200 and naturally raising concerns amongst investors that this pull-back may extend as the dollar continues to strengthen against a broad basket of currencies.
High Yield Market Technicals
It has been a long quiet period in credit but volatility has returned with a vengeance. I have had an opportunity to discuss this with a number of our institutional clients in recent days, but there are a few factors that are exacerbating the recent price declines in the high yield bond market.
Gold and US Monetary Policy
In this weeks Gold Report we conduct a historical analysis of the impact of US monetary policy announcements on the price of gold in US dollars. Beginning with the Federal Reserves extra-ordinary 75 basis point Fed Funds rate cut in January 2008 and the most significant central bank policy announcements since, the analysis looks at the resulting reaction of the gold market and the US 10 year real yield over a three month period.
Evaluating Break-Even Levels when Interest Rates Rise
In the current low interest rate environment across the Treasury curve and investment grade credit space, low coupon rates provide less protection against market value loss resulting from rising interest rates. When interest rates were higher, fixed income investors enjoyed the benefit of earning higher recurring income to offset any market value declines.
Gold for the Long Run
We continue on the theme gold and the dollar but this week take a short look at their long-term relationship and relative movement over the last 40 years. In particular we focus on the period post the ending of the Bretton-Woods agreement by the Nixon administration in 1971 (the so-called Nixon Shock) which terminated dollar convertibility to gold and thus established the dollar as a fiat currency.
High Yield in a Rising Rate Environment: A Perspective on Historical Performance
Since 1980, Treasury yields have increased (i.e., interest rates rose), in 15 of those years. In every one of those years, high yield has outperformed the investment grade market. The long-term numbers show that over those 15 years since 1980 where we saw Treasury yield increases (i.e., interest rates rose), high yield had an average return of 13.7% (or 10.4% if you exclude the massive performance in 2009). This compares to only a 4.5% average return (or 3.6% excluding 2009) for investment grade bonds over the same period.
Conditions are right for the dollar to weigh on gold
In last weeks Gold Report we looked at the historical relationship between the gold price in dollars and the value of the dollar, as measured by the Intercontinental Exchange US dollar trade weighted index (USDX) and found a strong inverse relationship between the two a strong dollar has historically tended to be associated with a weak gold price.
Results 101–150 of 282 found.