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Posted by on Sep 28, 2016 in ETF Strategist, Investment Perspective

No, You Shouldn’t Invest Like Yale

No, You Shouldn’t Invest Like Yale

By Roger Nusbaum, AdvisorShares ETF Strategist   The Yale University endowment recently announced its return for the year ending June 30th, 2016 as well as its asset allocation targets for the current year. The endowment netted 3.4% but the overall size of the endowment declined slightly as the withdrawal exceeded the investment performance. They published allocation targets as follows: Absolute Return:        22.5% Venture Capital:          16.0% Foreign Equity:           15.0% Leveraged Buyouts:    15.0% Real Estate:                 12.5% Bonds and Cash:         7.5% Natural Resources:      7.5% Domestic Equity:        4.0% A look at the allocation seems like a logical follow up to last week’s post titled Allocation Efficiency. In years past we have looked at the allocations from Harvard as well as Yale and a couple of other similar pools of capital. Zooming out a little, Yale says it wants a minimum of 30% in non-correlated assets which it believes includes cash, bonds and absolute return. It limits 50% of the portfolio to illiquid assets which it says includes venture capital, leveraged buyouts, real estate...

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Posted by on Sep 22, 2016 in Investment Perspective

Using Momentum to Invest in ADRs Proves Highly Effective Says Dorsey, Wright & Associates’ John Lewis

Using Momentum to Invest in ADRs Proves Highly Effective Says Dorsey, Wright & Associates’ John Lewis

Editor’s note: This is an excerpt from a feature in HedgeWeek on Dorsey Wright & Associates investment process as well information about the ADR market.   Back in July 2014, the Sterling/US Dollar exchange rate was reached a high of USD1.71 but since then it has headed south, falling as low as USD1.29 following Brexit. This downward trend has been a boon for US investors travelling to Europe on vacation. And whilst many have continued to focus their investment portfolios on US domestic stocks, the idea of actually owning international stocks has taken a back seat. This is ill advised, however, given that there are already early signs that the US dollar might be softening; indeed, the sterling has just risen to USD1.327 on the back of strong manufacturing data. Rather than overlook the vast array of opportunities that exist to hold securities in dynamic international companies, there is a viable solution: American Depositary Receipts (ADRs). These have long been used (since 1927) to allow US investors easy access...

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Posted by on Sep 16, 2016 in ETF Strategist, Investment Perspective

Eight Brutal Truths About Retirement

Eight Brutal Truths About Retirement

By Roger Nusbaum, AdvisorShares ETF Strategist   Today’s post comes about from two articles read over the weekend; Barron’s Guide To A Healthier, Wealthier and Wiser Retirement and 20 Brutal Truths About Life No One Wants To Admit from Inc.com. The Barron’s piece was a roundtable with a little too much insurance talk/salesmanship for my liking but still some good points were raised including how important it is for not only spouses to communicate about financial/retirement matters but this conversation needs to occur between generations too. The Brutal Truths article was a list of things like 3) Your Material Wealth Won’t Make You A Better or Happier Person, 5) Donating Money Does Less Than Donating Time and 20) Time Is Your Most Valuable Asset. While the article could have probably conveyed the ideas of having the right priorities, volunteerism and live in the moment in fewer than 20 truths, these are still important ideas. You have no control over market returns Over the last 15 years the S&P 500...

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Posted by on Aug 31, 2016 in ETF Strategist, Investment Perspective

Is Barron’s Right About Options Funds?

Is Barron’s Right About Options Funds?

By Roger Nusbaum, AdvisorShares ETF Strategist   Barron’s had an article over the weekend titled Why An Options Fund Is A Good Idea Now. There may have been a couple of different catalysts for the article including the recent creation of a category for these funds by Morningstar as well as the sentiment expressed by the author about bond yields being very low. The article then goes on to describe the different types of options funds in the category. I’ve been writing about options funds for many years and believe in them in proper moderation and with the proper expectations. First thing is that I think moving assets earmarked for fixed income into equities, even low volatility equities with high yields is something destined to end badly. I’ve made this point countless times before, equities with low volatility still have a lot more volatility than most bond funds and individual bonds. An equity that goes down 25% in a down 50% world is a good relative result…. for equities,...

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Posted by on Aug 24, 2016 in ETF Strategist, Investment Perspective, Market Insight

Alternative Context

Alternative Context

By Roger Nusbaum, AdvisorShares ETF Strategist   Barron’s had an article about alternative strategies over the weekend that attempted to sort out whether the traditional mutual fund wrapper might be better than the ETF wrapper for this segment. There was a comment that I found to be very interesting as follows; Huh? 3.9%, 2.4%, and they are proud of that? I can buy a Pimco bond fund and beat those returns by 50% with no stock risk. Still not sure what the lure of ‘alt’ funds are. Since inception, they have been universally bad. I believe this is absolutely the wrong way to look at alternatives. This is a point I have made many times before but alternatives are for providing diversification against extreme market events like the stock market cutting in half or if there is ever a comeuppance in the bond market for years of shockingly low rates. Looking backwards, yields have trended lower for decades providing strong returns beyond the coupon. While equity returns have been poor...

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Posted by on Aug 11, 2016 in ETF Strategist, Investment Perspective, Market Insight

This Is The New Normal

This Is The New Normal

By Roger Nusbaum, AdvisorShares ETF Strategist   As the world was rolling over into financial crisis in 2008 the stewards at PIMCO coined the phrase New Normal which, very short version, meant low interest rates, very slow growth and in a word; malaise. The malaise seems to be perpetual, the growth might be slower than had been imagined back then and interest rates seem to be going lower. As monetary and fiscal policies were created and enacted to acquiesce to the New Normal, there were warnings of dire consequences, mostly over extreme price inflation that would prove ruinous. However, the opposite has happened; there isn’t enough inflation (at least as measured by CPI) and monetary and fiscal policies globally continue to increase or otherwise become more accommodative while interest rates keep going down. A couple of months ago there was $10 trillion worth of debt trading at negative rates. That number has since gone up to $13 trillion. The Swiss ten-year note has had a negative yield since January,...

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