Markets
Fretting over salting away enough cash for retirement against the backdrop of the helter skelter ride, courtesy of the stock market?
Yeah, it’s a thing.
In the dawning days of September, the S&P 500 index of stocks saw almost 24% fly out the window, according to Sandy Wiggins, of ACG Wealth Management in Midlothian, appearing on wtvr.com. Bonds, what’s more, typically, regarded as a safer option than stocks, also hit the skids. Through that month, Bloomberg US Aggregate – the main bond index – kissed away 14.6%.
“It’s a scary time for investors, especially those who have retired or are planning to in the next few years,” Wiggins said, reported wtlocal.com. “However, the key to successful long-term investing is to keep fear from making decisions in such difficult times. Investor psychology is such that greed in good times and fear in bad lead to overreaction and bad decisions.
“First, realize that timing the market is a losing strategy,” Wiggins continued. “By timing the market, we mean moving from stocks to cash or something else conservative with the expectation of going back when things feel better. The best demonstration of the folly of market timing is to examine the impact on returns by staying invested and missing the best return days.”
Following two years online, October 28-30, the Esports and Gaming Summit took place again onsite. Organized by Gariath Concepts, the event’s renowned as the largest Gaming Convention in Southeast Asia. “At Globe, we are very happy and excited to be part of ESGS this year. In line with our Game Well Played campaign, we have activities in our booth and throughout the entire ESGS event area that promotes multiple products, experiences, and most of all, opportunities to do good,” said Rina Azcuña-Siongco, head of Globe’s Get Entertained Tribe, during a press conference ahead of the summit.
Yet, all might not be peaches and cream on the ESG front. In recent posts, Kevin LaCroix, an attorney and executive vice president, RT ProExec, indicated ESG has a fundamental flaw: it’s void of definition, leading to what he characterized as “sloppy thinking,” according to dandodiary.com.
These ESG related trepidations are explored in a recent post on the Harvard Law School Forum on Corporate Governance. Leveraging cybersecurity as an example, Douglas Chia of Soundboard Governance LLC, illustrates one of the “biggest flaws” of ESG is “the subjective open-endedness of what counts as E, S, or G.”
Historical lows. This year, they’ve besieged the Bloomberg Global Aggerate and Bloomberg U.S. Treasury indexes, according to etftrends.com.
As they put high risk assets in the market, investors are second guessing the role of fixed income in their portfolios. That’s where active managed funds can provide a boost.
Fixed income might not exactly be in the driver’s seat now, but when it comes to the bond market, investors can’t simply look the other way. Why not? Well, it’s not just the world’s largest securities market – and by a considerable margin – it’s also rode the wave of significant growth. And that’s both in terms of size and the number of issuers.
“Navigating the bond market is even more challenging for advisors this year as bonds fall in value,” said Todd Rosenbluth, head of Research at VettaFi. “However, the ability to tap into the expertise of experienced managers along with the liquidity benefits of an ETF has been compelling.”
Meantime, face it: many investors aren’t accustomed to the volatility and price drops prompted by dramatically growing interest rates this year, according to advisorscapital.com.
The upside? Yields on fixed income securities have really made out better than they have in years.
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Due to their difficult to resist growth potential, many investors rock on small cap stocks – less than $1 billion market cap, according to talkmarkets.com.
Thing is, because of their volatility, which translates into factors such as a stepped up risk of bankruptcy, the stocks are surrounded by less than favorable sentiment. While a valid point of view, the perspective, seemingly, is at least a tad overblown. Over the long run, numerous small caps hit pay dirt.
That said, due to sometimes daunting wild swings in pricing, like a bad date, compatibility among conservative investors and small caps might be zilch. Some apps, y’know…
Meantime, what do factors such as the Ukraine war, escalating oil prices and interest rates sending U.S. equity markets into the blender this year add up to? Why, greater volatility, of course.
And compared to their large cap counterparts, there’s this, well, thing, about U.S. small stocks compared to their large cap counterparts: greater risk, according to oakfunds.com. While it might seem somewhat, well, illogical to propose ratcheting up the allocation of small cap stocks into your portfolio, it might serve as a buffer against these tumultuous times and offset harrowing times that could be linked with large cap stocks.
American Century Investments recently launched its newest active ETF, the American Century Short Duration Strategic Income ETF (SDSI). The fund, which now trades on the NASDAQ, will seek to generate attractive yield by investing across multiple fixed-income market segments that maintain a short-duration focus. The fund invests in both investment-grade and high-yield, non-money market debt securities. This could include corporate bonds and notes, government securities, and securities backed by mortgages or other assets. SDSI is a transparent active ETF with an expense ratio of 0.32%. The fund management team includes Jason Greenblath, Charles Tan, Jeffrey Houston, CFA, and Peter Van Gelderen. Ed Rosenberg, American Century's head of ETFs, noted that "SDSI expands our existing Short Duration Strategic Income capabilities to an actively managed ETF. The Short Duration Strategic Income ETF seeks to complement an investor's core bond holdings with high current income, broad diversification, and the potential to mitigate the impact of rising rates."
Finsum: American Century continues to build up its active ETF lineup with the addition of the American Century Short Duration Strategic Income ETF.
With yields rising as the Fed pursues its hawkish monetary policy, investors are piling billions into ETFs that track both the short- and long-term treasury market. For example, $13 billion has been added to the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) this year, a product that now offers some of the most attractive yields in over a decade, while having very little interest-rate risk. On the other end of the yield curve, investors have flooded a similar amount into the iShares 20+ Year Treasury Bond ETF (TLT), which has experienced historic losses due to the Fed’s rate hikes. TLT has seen more new inflows than any other fixed-income ETF this year. However, the reasons for these inflows likely differ between the two. Investors seeking yield can now find that in a short-term treasury ETF like BIL, while investors that believe the Fed will slow down rate hikes, or even cut rates in the future, will benefit from the high duration that a long-term bond ETF such as TLT could provide. The steep losses in the market this year have also driven defensive investors into cash-like instruments such as BIL.
Finsum:Investors looking for yield and safety are piling into short treasury ETFs, while investors seeking high duration are flooding into long-term bond ETFs.