Category Archives: Fixed Income

Replacing LIBOR

LIBOR – the London Interbank Offered Rate — is the benchmark for over $300 trillion of loans, derivatives and other financial instruments.  LIBOR started in the syndicated loan market of the 1960s; today it is quoted in different currencies and maturities. Following scandals in 2012-2013, LIBOR is being replaced and will disappear in 2021. For Read more […]

Market Conditions Favored Government Bond Funds in Second Half of 2018

The SPIVA® U.S. Year-End 2018 Scorecard shows a reversal of the relative short-term performance of fixed income funds at the end of 2018 from six months prior. Combined with the interest rates move, this might shed some light on understanding the duration positioning of active funds. We focus on government bond funds for our analysis, Read more […]

2018 SPIVA® Scorecard: Volatility Does Not Help Active Performance

Contrary to the myth that active managers tend to fare better than their benchmarks during volatile markets, 68.83% of domestic equity funds lagged the S&P Composite 1500® during the one-year period ending Dec. 31, 2018, making 2018 the fourth-worst year for active U.S. equity managers since 2001 (see Exhibit 1). Evidence from the SPIVA U.S. Read more […]

Sea Change at the Fed

Today’s Fed announcement keeping the Fed funds target range at 2.25% to 2.5% was more than simply leaving rates unchanged for the moment. Behind the headlines are changes in their expectations for inflation and the economy and adjustments in their operating procedures: The FOMC will be patient as it determines what future adjustments to the Read more […]

2018 Retirement Funding Update for DC Account Holders

2018 produced negative absolute returns across a number of asset classes, particularly international stocks. A broad benchmark of stocks traded outside of the U.S., the S&P Global ex-U.S. BMI (US Dollar) Gross Total Return Index, lost 14.18% of its value. Nevertheless, many investments kept pace with the change in cost of securing future retirement income, Read more […]

Watching For Recession

Recent anxiety about an imminent recession sparked discussion of inverted yield curves and falling long term interest rates, The slope of the yield curve – the difference between the yield on the five or 10 year treasury note and a short term instrument like three month T-bills – may signal a recession. The chart shows Read more […]

Defensive “Buffer Protect” Option Strategies Can Help Investors Stay the Course

Equities have historically offered promising growth potential, but we have seen time and again how suddenly and severely the equity markets can be affected by events that are difficult to predict, and 2019 is not likely to be an exception. Losses can have a greater impact on portfolios than gains because the money remaining after Read more […]

The Importance of China Onshore Bonds in a Portfolio Context

China’s onshore bond market, the third-largest debt market in the world and trailing only behind the U.S. and Japan, is an important market for international investors, given that China is the second-largest economy in the world. However, historically foreign ownership of Chinese bonds in the domestic market has been negligible, largely due to a lack Read more […]

S&P 500 Drops 90 points

Why? Trade Hopes dashed – It turned out a deal with China wasn’t quite yet a done deal. Politicians should be reminded that markets move much faster than trade negotiations or Congress. Yield Curve approaching inversion – Five-year drops below two-year, but maybe we should wait for the ten year to drop too. Rising Interest Read more […]

The IMF Comment May Push South Africans to Sovereigns

The South African economy, Africa’s second-largest economy after Nigeria, may be helped by reforms put in place by President Cyril Ramaphosa. Earlier this year, South Africa suffered a setback, as data showed the economy dipping into a recession, but Ramophosa has since unveiled a stimulus and recovery plan to try and get it back on Read more […]