Home Price Bricks in Your Portfolio

In this post, we look at whether adding a home price index, as part of a multi-asset bundle, to a hypothetical portfolio could potentially improve its attributes. We created two portfolios, one comprised of equities and bonds (portfolio A), and a second that contained the elements of portfolio A plus commodities, home prices and infrastructure (portfolio B). We found that the undiversified portfolio A performed better, while the diversified portfolio B had a lower risk attribute during shorter time Read more […]

Leverage Loan Redemptions = Record Trading Volume + Market Depth?

With the majority of the fixed income world taking sides on prize fights like Greece, the European Central Bank (ECB), inflation, and energy-related debt, you may have missed the beating leveraged loans have been receiving in the media. The Financial Industry Regulatory Authority (FINRA) cited senior loan liquidity concerns in their January letter, stating “…these loans could face liquidity challenges if a significant number of investors make redemption requests at the same time.” Forbes Read more […]

The Rieger Report: Should Municipal Bonds be “Core”?

The often misunderstood municipal bond market is not considered a ‘core’ asset class by many investors and institutions offering financial products to investors.  Certainly investment grade municipal bonds have some qualifications to be ‘core’ and the proposed Qualified Public Infrastructure Bond (QPIB) might help change the way we think about this important asset class. Some things for us to consider: High quality.  The average rating (Moody’s, S&P and or Fitch) of bonds in the S&P Read more […]

A Sweet Spot in Commodities

It has been a rough start for commodities in 2015 with only six (natural gas, aluminum, lead, sugar, gold and silver) posting gains so far. At our commodities seminar in London last Sept, our speakers agreed picking a winner in this environment is diificult. However, it looks like one of our panelists may have done the job and picked “long sugar” as his best guess. It is possible he based his guess on fundamentals that indicate rebalancing is often a source of return in commodity investing  Read more […]

Inside The Dow

The Dow Jones Industrial Average is the best-known stock market measure. It has the longest continuous and consistent history of any market average or index and is still going strong today. There is more to the Dow than its long history and the historic record – it is a widely followed guide to the market and a key measure of large blue chip companies in the United States. It is on web sites and television news and is carried every day in the Wall Street Journal and many other newspapers. The Dow Read more […]

Lower Oil, Lower Yields

The unprecedented drop in oil prices has been a driver of global economic worries.  As of Jan. 16, 2015, the total return of the S&P GSCI Crude Oil is down 8.89% MTD, after closing out 2014 down 42.5%. As of the same date, the S&P U.S. Issued Investment Grade Corporate Bond Index has returned 1.76% MTD, as the energy sector accounts for only 8% of market value for this index.  In comparison, the energy sector of the S&P U.S. Issued High Yield Corporate Bond Index has returned 14% Read more […]

Sukuk 2014 in Review

The Dow Jones Sukuk Total Return Index (Ex- Reinvestment) delivered a total return of 6.37% in 2014, which outperformed its 0.23% gain in the prior year; see Exhibit 1 for the index performance. Exhibit 1: Total Return Performance of the Dow Jones Sukuk Total Return Index (Ex-Reinvestment) With the continued growth in the sukuk market, the total market value tracked by the index rose 32% to USD 48 billion, as of December 31, 2014.  Comparing the new issues in 2013 and 2014, both the count Read more […]

Ports in the Storm

Since last fall, the S&P 500 has gone through three distinct downdrafts.  Between September 18 and October 15, the index fell by 7.3%.   It recovered that lost ground, and then some, rising 11.8% through December 5.  Then a second, less severe, decline began, as the index fell 4.9% between December 5 and December 16, followed by a 6.0% recovery through December 29.  This brought the S&P 500 to its (so far!) all-time high.  From December 29 through yesterday’s close, the index Read more […]

These Assets Mix With Oil Like Water

While many assets have some relationship with oil, there are varying degrees of correlation and even a few surprises. For example, Canadian equities are more correlated with oil than are the emerging markets and the US equities; Australian equities are barely correlated with oil, and China who is not nearly as big a producer as a consumer is moderately correlated with oil. Gold and (Brent) oil are not as oppositely related as many think but have a weak-moderately positive correlation of 0.32. Read more […]

Fear of Fear Itself Reaches Crisis Levels

Franklin Delano Roosevelt would be disappointed. The US fear index, officially named the CBOE Volatility Index (VIX), has ticked up, averaging 16.4 since the beginning of Q4 2014, compared to 13.5 in the first three quarters of last year. If the story stopped there, we might still be able to look FDR in the eye. But we are in an even worse condition. Contrary to his advice, we are fearing “fear itself,” and doing so at levels typical of major crises, including the financial meltdown of 2008. How Read more […]