Displaying items by tag: risk

PIMCO saw the second quarter sell-off in bond funds as investors pulled nearly $30 billion in the last three months. The biggest cause for the sell-off is the rising rate hikes and inflation which may be causing yields to rise and bond prices to fall. Still, analysts say that if interest hikes begin to stabilize then the bond outflows will seize and even reverse into inflows. 

This is the largest sell-off since the start of the pandemic, and investors are concerned a recession is around the corner. PIMCOs shining light are the few funds that it has that are doing okay despite macro headwinds and could prove to be a driving force for inflows when markets stabilize.

Finsum: Bond prices are just too low right now and yields will fall with inflation easing and the fed tightening, but its a matter of it happening soon enough. 

A new study from Escalent details model portfolio use and acceleration since the pandemic. There has been a slow number of model portfolio adoption from third party issuers since the pandemic but those already using third party MP have had a significant uptick with over a fourth of them have seen an increase in use. However, advisors that lean on in-house production have mainly kept it that way which is a little over half of the users. Overall third-party adoption is still on the rise, and that's despite advisors' apprehension of MPs when compared to standard active management during high volatility.

Finsum: Model portfolios seem to be simplifying the advisor decision-making process, regardless of whether they are in-house or third party.

Many investors have become accustomed to the rising equity prices that have been pumped up by an ultra-low rate environment and are overexposed to too much risk, at least that's the opinion of 4/5ths of investment professionals surveyed by Natixis Investment managers. Over 3/4rs of professionals surveyed said that inflation and interest rates were the biggest risks to portfolios moving forward. The way out of that risk exposure is to have more active management which can thrive when the risks are apparent. The other solution is model portfolios which have been built to target specific risks like inflation or interest rate risk. Finally, advisors are being begged to add crypto to portfolios in a high weight, and are unsure of how this fits into portfolios.

Finsum: Regular volatility or supply-side shocks are almost impossible to predict, but when the risks are very apparent investors should take the necessary precautions.

hroughout 2021 one of the biggest worries for investors, business owners, and policy makers has been the return of inflation. Long dormant, inflation has surged as markets and economies recover from the COVID-19 pandemic ... [Read More]

We currently find ourselves in an unusual situation, as far as the economy and the financial markets. Due to the coronavirus pandemic, the Federal Government and Federal Reserve introduced massive fiscal and monetary stimulus programs ... [Read More]