Dave King: Convertibles are a way to pursue good risk-adjusted return through price appreciation and income. They complement traditional equity income allocations, offering some equity characteristics and some fixed-income characteristics. The casual observer may think that convertibles performance lands midway between the performance of stocks and bonds. But performance has been fairly consistent with the S&P 500 over the past 20 years — with lower volatility and more income. And it's been like that since the early 1970s, which is the beginning of any convertible index.

In April, we wrote about an inevitable contraction in the U.S. economy as a result of the COVID-19 intentional shutdown. Now the data is in, and it’s official. The National Bureau of Economics Research (NBER), the agency that officially designates recessionary periods, has made its call: the longest economic expansion since the 1800s ended in February, and the U.S. economy entered a recession. In its announcement, NBER noted “A peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854.”

 

While that expansion was notable for its length, no one will eulogize its vigor. At 2.3% annualized growth, it was the weakest recovery on record.

 

A CRD is a distribution made from an eligible retirement plan. It can be taken by an IRA account owner or by a participant in a qualified employer plan, if the plan permits. With a new IRS Notice, it’s now clear that a CRD can be used for health or economic reasons when an individual or someone in the individual’s household* is affected by COVID-19.

To apply, people must self-certify that they meet one of the qualifying CRD conditions. A “qualified individual” is any individual, their spouse or their dependent who has received a diagnosis of COVID-19 or experienced adverse financial consequences as a result of the pandemic. In previous regulatory guidance, financial hardship was tied to the individual alone.

 

? Equity markets have proven to be quite resilient and have been trading on the conclusion that the world will recover from this year’s challenges. Monetary and fiscal support have clearly worked to support markets, and momentum has resumed. On the other hand, valuations no longer look as attractive, and earnings revisions continue to be negative. A burgeoning second viral wave has created concerns that the market hasn’t accurately priced prospective damage to the global economy. With such conflicting signals, we believe policy allocations to equity are appropriate.

? We continue to believe credit markets are best suited to benefit from the recent generous fiscal support policies. Spreads have tightened since March, but many fixed-income pricing dislocations still haven’t rebounded. This asset class can provide attractive defensive opportunities and a path to take advantage of a recovery.

? While truly non-directional strategies represent...

Small businesses have a new reason to take another look at the Paycheck Protection Program (PPP) now that greater flexibility for loan forgiveness has been signed into law. For business owners who haven’t applied yet, there’s still loan money available.

There are many components that can contribute to portfolio return: exposure to asset classes, over and underweights to particular sectors or industries, and security selection, which is the active decision to include or exclude certain companies from a portfolio. Prior to the recent market downturn, one of the easiest and most cost-effective paths for many investors to gain market exposure was through passive ETFs that replicated market exposures. This type of approach can be beneficial when a rising tide (or market) is lifting all boats. But in a downturn, and through a recovery, it can mean that an investor’s portfolio may lag. When stocks are declining, the performance of a purely passive benchmark  strategy will match the loss of the index — there’s no prospect of losing less. And when things begin to recover, variation in returns can mean lost opportunities.

 

For example, when sectors outperform, it’s rare that every stock in those sectors beats...

Dave King: Convertibles are a way to pursue good risk-adjusted return through price appreciation and income. They complement traditional equity income allocations, offering some equity characteristics and some fixed-income characteristics. The casual observer may think that convertibles performance lands midway between the performance of stocks and bonds. But performance has been fairly consistent with the S&P 500 over the past 20 years — with lower volatility and more income. And it's been like that since the early 1970s, which is the beginning of any convertible index.

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High-quality bonds stumbled early in the current crisis. But there are many reasons to expect them to rise in a down market — making them our fixed income investment of choice.

Investors are increasingly looking to their advisors to offer a wide range of services that address their unique situations. At the same time, advisors are facing the added pressure of navigating a complex regulatory landscape and an ever-evolving capital markets environment. Given this challenging backdrop, many advisors are turning to model portfolios created by investment managers to help their clients meet their financial goals — models that align with their thinking and pursue the focused outcomes their clients demand.

“LGBT Great is proud to recognise one-hundred investment and savings industry leaders in this year’s Pride campaign. The success of Pride is partly due to the support that the movement has gained from influential allies. Allyship is about learning and putting yourself in the shoes of others so we can fully understand the challenges others face because of their identities. Allyship is about taking responsibility and accountability for actions that drive change. 

Recent global events have made us all look in the mirror and reflect on what more we can do. Our industry needs to step up its support and representation of the BAME community including those who are part of our LGBT+ community. Allyship will play a vital role in ensuring that executive leadership becomes more representative in the future. To achieve this, we need the help and support of an active task force of allies. 

Allyship is powerful and we are proud to announce a new...

“LGBT Great is proud to recognise one-hundred investment and savings industry leaders in this year’s Pride campaign. The success of Pride is partly due to the support that the movement has gained from influential allies. Allyship is about learning and putting yourself in the shoes of others so we can fully understand the challenges others face because of their identities. Allyship is about taking responsibility and accountability for actions that drive change. 

Recent global events have made us all look in the mirror and reflect on what more we can do. Our industry needs to step up its support and representation of the BAME community including those who are part of our LGBT+ community. Allyship will play a vital role in ensuring that executive leadership becomes more representative in the future. To achieve this, we need the help and support of an active task force of allies. 

Allyship is powerful and we are proud to announce a new...

Equities have nearly recovered their losses since they first began tumbling in February. It’s been an astonishingly fast round trip in historical terms. And for some, it defies common sense. The natural question is whether financial markets are ahead of the economy and whether they should be. At the risk of spoiling the plot, the answer to the first question is “Yes!” And for the second, again, “Yes!”

 

It’s generally accepted that investors “discount,” or take into consideration, all available information including present and potential future events. This means security prices (bond and equity) reflect significant expectations about company earnings, defaults, inflation, and monetary and fiscal policy. They also reflect views about the current robustness of a company’s liquidity and balance sheet, and the stability of the financial system generally. Admiring a building without understanding the strength of its foundation is folly.

 

...

Annual returns get headlines, but investors may not appreciate the frequency of portfolio drawdowns — a peak to trough decline in the value of an investment that can significantly erode wealth.

Drawdowns rarely align with widely used calendar-year market returns and may include up and down market movements that obscure a longer term negative trend. From 1980 through 2019, there were only seven calendar years in which the S&P 500 Index posted a negative return. But within that period, there were 15 drawdowns of 10% or more.

The frequency of drawdowns suggests that a key component of a successful long-term investment strategy would be a systematic approach to determine exposure to riskier assets under varying market conditions.

Small businesses have a new reason to take another look at the Paycheck Protection Program (PPP) now that greater flexibility for loan forgiveness has been signed into law. For business owners who haven’t applied yet, there’s still loan money available.

There are many components that can contribute to portfolio return: exposure to asset classes, over and underweights to particular sectors or industries, and security selection, which is the active decision to include or exclude certain companies from a portfolio. Prior to the recent market downturn, one of the easiest and most cost-effective paths for many investors to gain market exposure was through passive ETFs that replicated market exposures. This type of approach can be beneficial when a rising tide (or market) is lifting all boats. But in a downturn, and through a recovery, it can mean that an investor’s portfolio may lag. When stocks are declining, the performance of a purely passive benchmark  strategy will match the loss of the index — there’s no prospect of losing less. And when things begin to recover, variation in returns can mean lost opportunities.

 

For example, when sectors outperform, it’s rare that every stock in those sectors beats...

In April, we wrote about an inevitable contraction in the U.S. economy as a result of the COVID-19 intentional shutdown. Now the data is in, and it’s official. The National Bureau of Economics Research (NBER), the agency that officially designates recessionary periods, has made its call: the longest economic expansion since the 1800s ended in February, and the U.S. economy entered a recession. In its announcement, NBER noted “A peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854.”

 

While that expansion was notable for its length, no one will eulogize its vigor. At 2.3% annualized growth, it was the weakest recovery on record.

 

Equities have nearly recovered their losses since they first began tumbling in February. It’s been an astonishingly fast round trip in historical terms. And for some, it defies common sense. The natural question is whether financial markets are ahead of the economy and whether they should be. At the risk of spoiling the plot, the answer to the first question is “Yes!” And for the second, again, “Yes!”

 

It’s generally accepted that investors “discount,” or take into consideration, all available information including present and potential future events. This means security prices (bond and equity) reflect significant expectations about company earnings, defaults, inflation, and monetary and fiscal policy. They also reflect views about the current robustness of a company’s liquidity and balance sheet, and the stability of the financial system generally. Admiring a building without understanding the strength of its foundation is folly.

 

...

To complete your registration, please select and answer your security questions and accept the Terms & Conditions.

Security questions may be used to verify your identity in the future. Choose questions and answers you will remember.

High-quality bonds stumbled early in the current crisis. But there are many reasons to expect them to rise in a down market — making them our fixed income investment of choice.

Small businesses have a new reason to take another look at the Paycheck Protection Program (PPP) now that greater flexibility for loan forgiveness has been signed into law. For business owners who haven’t applied yet, there’s still loan money available.

How unique is the current market volatility from an asset allocation perspective?

Josh Kutin: Every recession is different, and every market correction has its own nuances. A pandemic and intentional economic shutdown are unique, but some of the patterns we see are common: risky assets post large negative returns, volatility metrics spike sharply, and everyone becomes concerned about liquidity. It didn’t take long for the investing community to draw parallels between the pandemic-related market volatility of 2020 and the global financial crisis of 2008.

 

There are many components that can contribute to portfolio return: exposure to asset classes, over and underweights to particular sectors or industries, and security selection, which is the active decision to include or exclude certain companies from a portfolio. Prior to the recent market downturn, one of the easiest and most cost-effective paths for many investors to gain market exposure was through passive ETFs that replicated market exposures. This type of approach can be beneficial when a rising tide (or market) is lifting all boats. But in a downturn, and through a recovery, it can mean that an investor’s portfolio may lag. When stocks are declining, the performance of a purely passive benchmark  strategy will match the loss of the index — there’s no prospect of losing less. And when things begin to recover, variation in returns can mean lost opportunities.

 

For example, when sectors outperform, it’s rare that every stock in those sectors beats...