In an article for ThinkAdvisor, Dinah Wisenberg Brin discussed a recent bullish commentary on various segments of the fixed income market from John Hancock’s co-chief investment strategist Matthew Miskin. 

Miskin sees the current inverted yield curve as due to normalize in the coming months as the Federal Reserve embarks on a cutting cycle given the firm’s view that the economy should continue to decelerate along with cooling inflation. This will create a bond ‘bull steepener’ as short-term rates decline.

It sees a recession materializing over the next couple of quarters which would be a positive tailwind for fixed income. He sees opportunities in intermediate duration bonds which historically have performed the best following yield curve inversions. Further, he sees value in the space given that the average investment-grade, intermediate bond portfolio is trading at 90 cents on the dollar with a 5% yield. 

Miskin is also bullish on municipal bonds given historically attractive yields of 7% on a ta-equivalent basis for the highest earners. In terms of equities, the firm is not a believer in the current stock market rally given weakness in earnings and its expectations of a further softening of the economic picture. 

Finsum: John Hancock’s co-chief investment strategist is bullish on fixed income with a particular focus on intermediate duration and municipal debt.

The alternative investing trend was growing at a rapid clip over the past decade, but its seen an uptick in interest and adoption following the poor performance of stocks and bonds. While both asset classes have delivered strong, long-term results, they have performed poorly in inflationary, higher-rate environments.

In contrast, alternative investing delivered better returns while also reducing portfolio volatility. As access to this category has increased, there is more liquidity and transparency which is, in turn, attracting more interest from institutions.

In an article for Business Kora, Jung Min-Hee covers how the Korea Investment Corporation (KIC) will be increasing its allocation to alternative investments to 25%. Currently, it is the 10th largest sovereign wealth fund in the world and has $170 billion in assets. As of the start of the year, it had 22% allocated to alternatives.

In an interview, KIC President Jin Seung-ho indicated that the fund is particularly interested in private credit as he doesn’t see too much risk in this segment of the market. Concurrently, he doesn’t see the Fed cutting rates until 2024.

Finsum: Many financial advisors are nearing retirement. One option that is growing in popularity is for advisors to sell their practice but remain as an employee for a certain amount of time.

In an article for InvestmentNews, Kristine McManus, the Chief Advisor Growth Officer at Commonwealth Financial, discussed various considerations for advisors who are nearing retirement. Many want to exit their own business in a gradual way rather than suddenly and continue working with new owners to provide a seamless transition for their clients. 

According to Commonwealth's research, financial advisor M&A data over the last decade shows that there were 359 deals. In 205 of the deals, the advisor who was selling, immediately retired and exited the business. However, a third of the deals saw the advisors remain past the acquisition.

Some of the positives of this approach are that it leads to less client attrition and provides a natural way to introduce clients to the new management team. For the selling advisor, it allows them to gradually ease into retirement while slowly letting go of responsibilities in a more organic way while ensuring that their business and clients are in good hands.

There are some negatives which include a potential clash in management styles or investing philosophy between the seller and acquirer. Often, the selling advisor has difficulty giving up control when it comes to making major decisions and transitioning into an employee role. 

Overall, both parties need to be aligned in terms of goals and constant communication in order to minimize the negatives and accentuate the positives with this type of transaction.

Finsum: Many financial advisors are nearing retirement and need to have a succession plan.  One option that is growing in popularity is for advisors to sell their practice but remain as an employee for a certain amount of time.