Research

Are Sovereign Bonds Really Risk-Free?

Are Sovereign Bonds Really Risk-Free?

The concept of a “risk free rate of return” has long been a staple of finance theory and investment practice. Since sovereign governments have abrogated the powers to tax and print money, it has been reasoned that their risk of default – at least among the governments of major, developed-market economies – has been zero. Thus, the “risk free rate” ... [read more]

PIMCO Considers Managed Futures vs. Multi-Strategy Funds

pimco considers managed-futures vs multi-strategy funds

Managed futures and multi-strategy funds have both become increasingly popular over the past several years. Both provide investors with the potential to diversify their returns, and to outperform during equity-market downturns – but which is better? That’s the question considered by PIMCO’s Justin Blesy, Ashish Tiwari, and Chris Santore in their ... [read more]

Campbell & Company Considers Importance of Skewness and Timing

Campbell & Company Considers Importance of Skewness and Timing

Skewness is a term that describes the distribution of returns for a specific security, asset class or portfolio, and is often utilized when combining asset classes or fund managers as part of the portfolio construction process. When considering a portfolio of investments, one with zero skewness would have a perfectly symmetric distribution of ... [read more]

Are Hedge Funds Superior to Liquid Alts?

Are Hedge Funds Superior to Liquid Alts?

Alternative mutual funds have several advantages over hedge funds that employ the same strategies: They’re more liquid, they’re more transparent, and they have lower fees. For retail investors that fall short of the “accredited” threshold ($200,000 in annual income or $1 million in liquid assets), alternative mutual funds and ETFs may represent ... [read more]

Proposed SEC Rule Threatens Viability of Liquid Alts

Proposed SEC Rule Threatens Viability of Liquid Alts

Late last year, the Securities and Exchange Commission (“SEC”) proposed a rule to regulate the use of derivatives by alternative mutual funds. According to Craig Lewis, Professor of Finance at the Owen Graduate School of Management at Vanderbilt University, the proposed rule would “significantly impact” the viability of these funds. Liquid Alts ... [read more]

BMO Recommends Multi-Alternative Approach

BMO Recommends Multi-Alternative Approach

The financial crisis and subsequent Great Recession fundamentally changed the investment world, perhaps forever. The traditional “60/40” approach (60% stocks, 40% bonds) faces “headwinds that haven’t occurred for much, if any, of its existence,” according to the authors of a BMO Global Asset Management whitepaper. Their suggested solution: ... [read more]

Calamos Urges Hedged-Equity Exposure for Retail Investors

Calamos Urges Hedged-Equity Exposure for Retail Investors

Equity volatility has been increasing along with correlations among U.S., international, and emerging-market stocks. With interest rates low and expected to slowly edge higher, bonds may be less attractive as a counterweight to equities than ever before. For these reasons, Calamos Investments urges investors to consider hedged-equity strategies in ... [read more]

DC Plans Should Emulate DB Plan Principles

DC Plans Should Emulate DB Plan Principles

The buy-and-hold, “60/40” portfolio strategy was designed for a different era. In the 1950s, an American worker had a reasonable expectation of staying with one employee for his entire career, and receiving a defined benefit (“DB”) pension upon retirement.Obviously, times have changed, and as more DB plans are frozen or terminated, more ... [read more]

Incorporating Alternatives Into Traditional 60/40 Portfolios

Incorporating Alternatives Into Traditional 60-40 Portfolios

In its recently released white paper “Finding a New Balance with Alternatives,” BMO Global Asset Management (“BMO GAM”) makes the case for incorporating alternative investments within traditional “60/40” portfolios. More specifically, BMO GAM advocates investors employ a variety of active alternative managers and strategies to create their own ... [read more]

Wide Dispersion of Returns Drives Need for Greater Expertise

Wide Dispersion of Returns Drives Need for Greater Expertise

U.S. stocks began 2016 in a bear market, and although volatility has recently subsided, some investors are betting on a return of further market fluctuations – or at least seeking to protect their portfolios against that possibility. This, according to Jonathan Belanger, Director of Research at AlphaCore Capital, is a good reason to take a look at ... [read more]