The CBOE Volatility Index (VIX) is a measure of equity market volatility. During the global financial crisis, a spike in the VIX was followed by a series of “aftershocks” as it returned to more normal levels.

If we follow a similar pattern in the current environment, we could continue to see episodes for quite some time. These aftershocks tend to be of progressively lower magnitude, but they can still cause elevated volatility experiences for investors.

It’s hard to predict a market bottom, but we may see daily swings become less extreme.

The economic impact of COVID-19 will be significant in the near term, but it will take time for it to show up in the standard economic dataset. The fiscal and monetary policy response is critical to stabilizing financial conditions and instilling confidence. Opportunities are emerging in credit markets. Investors could consider a dollar-cost-average approach to add exposure — with a focus on investment-grade credit.

We're observing various indicators that continue to suggest caution. Our focus right now is on a defensive capital preservation, and our equity scorecard is suggesting caution on the back of falling macro indicators. Volatility still remains extremely high. We believe that holding strategic allocations steady at a neutral position is the appropriate way to balance short-term caution with the long-term expectation that markets will eventually recover.

In the current market, fixed income has become extremely bifurcated in its performance. Treasuries have done very well since February and have provided an essential ballast in portfolios. The rest of the fixed-income market has faced more challenges — with negative returns across any non-sovereign debt — and generally poor relative performance from both active funds and index products. Given the prevailing uncertainty, Treasuries may continue to serve as a flight-to-quality asset. We believe that...

It’s now all but inevitable that we will see a deep contraction in U.S. economic activity as a result of the shutdown to contain the coronavirus. As of April 2, initial jobless claims (as reported by the Department of Labor) spiked to 6.6 million — a new record. Future DOL reports are likely to show further increases in the coming weeks, and it’s very likely that we’ll see the unemployment rate, recently at historic lows, rise to 6% in April. It may even reach 9%-10% in the upcoming months.

 

Market volatility resulting from the coronavirus has evolved into the most serious risk event since the 2008 financial crisis. In response, investors have been frequently reminded to stay focused on their long-term goals amid this shorter term disruption. It’s good advice. Because in a volatile market, there’s a strong urge to move to a “safe” asset, like cash. And for many, it’s a mistake.

 

If there was ever a time for a strategic policy portfolio, this is it. It can act as a baseline and a bulwark if the target mix of asset class exposures is based on investor goals, risk tolerance and time horizon. This baseline approach can be even more effective when it has a dynamic component that can make adjustments to equity and risky asset exposures on a systematic basis — based on market signals — rather than relying on bad decisions borne out of panic.

 

But how does a portfolio manager build a resilient strategic portfolio that...

The concept of the credit cycle is ambiguous. Not everyone talks about it in the same way, and not all parts of the economy are at the same stage of the cycle at the same time. At a basic level, the credit cycle centers on the vulnerability of borrowers and the compensation that lenders receive for extending credit to those borrowers.

The economic impact of COVID-19 will be significant in the near term, but it will take time for it to show up in the standard economic dataset. The fiscal and monetary policy response is critical to stabilizing financial conditions and instilling confidence. Opportunities are emerging in credit markets. Investors could consider a dollar-cost-average approach to add exposure — with a focus on investment-grade credit.

Investors often make the mistake of trying to time the market by simply selling out of it. Historically, some of the worst short-term market fluctuations and losses were followed by periods of substantial market recovery. In a volatile market, it’s tempting to move to a “safe” asset like cash. For many of us, the prospect of loss drives our decision-making. But in many cases, the better approach is to build a resilient strategic portfolio that can help manage risks on the downside. Consider your goals, time horizon, risk tolerance and overall financial situation when making an investment or asset allocation decision. A significant reallocation because of short-term uncertainty rarely pays off in the long term.

Short- and long-term interest rates around the world are historically low. Today’s rate environment is partly explained by central bank policies, a long period of secular disinflation and, more recently, slower global growth in major economic regions. A low-rate environment presents challenges for investors, especially those who are trying to generate a reasonable level of consistent income.

Investors have flocked to passive “benchmark” investing in order to match benchmark returns through low-cost products. But these benchmarks were designed to be a reference point that serves as a basis for comparison, not with a specific investor goal in mind. For investors who want to both meet a specific investment goal and manage costs, a strategic beta fund may be worth considering.

For three decades, Paul Wick had a front row seat in the evolution of the tech industry. He shares what he’s learned and what the future might hold in the sector.

More than 70% of the high-yield universe currently yields less than the high-yield index (yield to worst: 5.6%). However, a growing share of the market yields upward of 7%, reflecting the increased possibility of defaults within select sectors such as energy, telecommunications, retai, and healthcare. With yields frustratingly low, it can be tempting to stretch for more income by focusing on the highest yielding bonds. But this is a risky move. Many of these high-yielding bonds don’t offer enough incremental income over investment-grade bonds to justify the additional risk and volatility.

At the end of 2019, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act as part of the Further Consolidated Appropriations Act. The SECURE Act has many retirement-related implications, but it also includes expanded benefits for 529 plans.

 

In the past, businesses’ assets were tangible — they included things like a factory or machinery. But the portion of the world's economy that doesn't fit this definition is getting larger. For a growing number of companies, assets may include intangible resources, such as proprietary software, networks, brand recognition and algorithms.

How do equity and debt researchers think about intangible assets? Do certain metrics begin to take on greater importance, while others take on less? How does one assign value to a company (and decide whether a stock price makes sense) when assets are composed of property that lack a physical presence?

We conducted an industry-wide survey of investment professionals to capture their views on the role of intangibles in investing, examining their attitudes on existing methodologies for measuring intangibles and evaluating opportunities.

They agree that the analysis of intangibles can provide a competitive advantage to...

Thanks to advances in healthcare and the increasing trend of living a healthier lifestyle, many of us are living longer lives. According to the Society of Actuaries, a 65-year-old American male of average health has a 55% probability of living to age 85. A 65-year-old woman has a 65% likelihood of reaching age 85.

Living longer is good news. But for many of us, it means our retirement savings may need to last for 20 or 30 years — or more. Some people may be planning to work into their 70s to make ends meet. Some may never retire. But more than 40% of retirees had to leave the working world sooner than they had planned, according to the Employee Benefit Research Institute’s (EBRI) 29th Annual Retirement Confidence Survey. Reasons included corporate downsizing, health problems or disabilities, or having to care for a spouse or other family member.

 

The concept of the credit cycle is ambiguous. Not everyone talks about it in the same way, and not all parts of the economy are at the same stage of the cycle at the same time. At a basic level, the credit cycle centers on the vulnerability of borrowers and the compensation that lenders receive for extending credit to those borrowers.

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After a record-breaking 2019, what does this year have in store for the $3.8 trillion municipal-bond market?

Join Bloomberg News reporter Amanda Albright, columnist Joe Mysak and a panel of investors at our New York headquarters to discuss the year ahead, followed by a networking cocktail reception.