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Best Blogs of the Week #271

Posted by Anu Heda on Jul 17, 2017, in Best Blogs of the Week , tagged with , ,

AB – Five Ways Populism Could Impact Investors – A greater willingness to use fiscal stimulus alone has the potential to lift inflation, particularly because central banks are likely to keep interest rates low to ease the process. Against this background, populism could make a stronger political case for aggressively pursuing growth, which would increase inflationary pressures.

Aberdeen – All aboard the gloom train? – The OBR has undertaken a “stress test” of the public finances to model the effects of an economic downturn. The result? A resounding fail. Describing the potential fiscal effects as “severe,” the OBR warned that the deficit would rapidly rise in the event of a recession. And Brexit could well make things worse. The OBR noted that even a small drop-off in economic activity could have a big impact on the public purse. In comparison with a fall in Britain’s underlying growth rate caused by reduced European trade, any “divorce bill” paid to the European Union (EU) would pale into insignificance.

American Century – Impact Investing: Making Good With Your Money – Impact investing can be summed up as investing to make a difference, or to be a financial force for good. How that good happens is where descriptions start to diverge.

impact

 

Best Blogs of the Week #270

Posted by Anu Heda on Jul 10, 2017, in Best Blogs of the Week , tagged with ,

Happy July 4th week. So many blog posts; we focused on two with a particularly keen interest on the first post and the topic of portfolio construction.

BlackRock – Putting risk on a budget – We generally see two different approaches to portfolio construction aimed at improving the experience of the markets: 1) Achieve a return similar to your benchmark but with less total risk, or 2) generate a higher return than the benchmark, but at the same risk level. Refer to the chart below. Of the first set, only 35% of the portfolios we surveyed met the stated risk goal; in the second set, 53% met their risk target.

Janus Henderson – Meet the Newest Measure of Manager Performance: Phi –  The report finds that Phi, which attempts to quantify the combined motivational forces of purpose, habits and incentives of investment professionals, has a positive correlation to performance.

Construction

 

Best Blogs of the Week #269

Posted by Anu Heda on May 30, 2017, in Best Blogs of the Week , tagged with , ,

Hope everyone in the US was able to enjoy a good long weekend.

BlackRock – Common misconceptions about bond investing – Only about three in 10 (31%) of those surveyed correctly noted that if interest rates rise, the effect on the fixed income investments that investors already own is negative (when interest rates rise, bond prices fall).

Janus Henderson – The Three Pillars of Credibility – Carefully selecting a niche, or a Unique Business Tranche (UBT), means you can become a subject matter expert and further solidify your value among your clients. An easy way to define your niche is by personal affinity.

Wells Fargo – How thinking small could uncover value – The first reason equity valuations might look pricey could be due to flaws in the chosen valuation metric.

Everyone

Best Blogs of the Week #268

Posted by Anu Heda on May 22, 2017, in Best Blogs of the Week , tagged with ,

(Look below for a highly indicative price-to-book chart.)

Two posts this week capturing basic considerations about valuation: one for equities and one for bonds.

SSgA – Charting the Market: With Global Stocks at All-Time Highs, Where is Value Emerging? – It shows emerging market (EM) equities are the only regional equity gauge trading below their historical 10-year average based on P/B, while the US is trading at its 10-year high—although within the US there are opportunities for value, namely in financials.

Vanguard – Rates change, but the role of bonds doesn’t – Barring default, you can be certain of getting income until the bonds mature. It’s that income that drives returns for patient bond investors who resist the urge to jump in and out of the market.

Price

 

Best Blogs of the Week #267

Posted by Anu Heda on May 11, 2017, in Best Blogs of the Week , tagged with , ,

A midweek catch-up post detailing three interesting posts (not related to the French election)

BNY Mellon – The Pearl River Delta: the Achilles Heel of US protectionism – In our view, President Trump would need to introduce very stiff tariffs for any of this production to shift to the US, but the majority would probably still remain in China, leading to a rise in the end price instead.

SSgA – ESG Investing: One Size Does Not Fit All – For more benchmark-aware investors, a low carbon target index may be more suitable. For example, the MSCI ACWI Low Carbon Target Index assigns overweight positions to companies with low carbon emissions relative to sales and those with low fossil fuel reserves relative to market capitalization. The idea is to provide a lower-carbon exposure than that of the broad market.

WisdomTree – Stepping Up to BAT: Don’t Count It Out – … described the plan from House Speaker Paul Ryan and Rep. Kevin Brady as a comprehensive way to effectively replace the corporate income tax with a cash flow tax. This is a central feature of the border adjustment tax (BAT). The Ryan-Brady plan reduces rates, allows for immediate expensing of investments and moves to a territorial-based system.

Midweek