Research & News
Bill Gross’ commentary should be taken with a bigger grain of salt in this market
Bill Gross stands atop a mountain in the investment industry that makes him the most heavily quoted and least-questioned source of information about the bonds, interest rates and even the economy in general. There are good reasons his words are viewed as gospel. The 67-year-old founded Pacific Investment Management Company of Newport Beach, Calif. in 1971, and he now oversees nearly $1 trillion of assets including management of about $250 billion in the Total Return Fund. His performance has been consistently good because he knows what he’s doing. But such heavy reliance on a single source of information seems questionable for financial advisors. RIABiz has been looking around for someone with the knowledge of bonds and of Bill Gross himself to serve as a reality check on the river of opinions that flows from him. Read More…
Boomer Retirement Income Smackdown: Bond Ladders vs. Annuities
As the first wave of Baby Boomers turns 65 this year, retirement income is a growing issue for advisors and their clients. The question often comes down to this: What’s the better income producer, a bond ladder or an annuity, and how much will it cost? Read More…
A Look at Asset Dedication’s Virtual Business Model
A virtual business model built on best-of-breed technology proves to be the ideal solution for a small subadvisory firm with big dreams. Read More…
Safety of Investment Grade Bonds
With a few alarmists calling for a massive increase in municipal bond defaults and many investors still stinging from the Lehman Bros. bond defaults, should investors be worrying about their bonds? High quality municipal and corporate bonds have long been considered “safe” asset classes. Volatility in the stock market is enough to keep many investors up at night and now many may be losing sleep over their bonds too. This paper takes an historical look at the risks and relative safety of high quality municipal and corporate bonds. We will show that although investors need to carefully analyze their bond investments, they can still rely on high rated investment grade bonds to deliver predictable income and relative stability in their portfolios. Download Now…
Should you Christmas-shop the market? It turns out there’s a seasonality to finance, too
Seasonality is a familiar concept when it comes to retail sales. December is always the biggest month, with sales about 20 percent higher than the average month. Its seasonal factor is therefore 1.20; to get the seasonally adjusted figure, divide the raw numbers by 1.20. Read more…
The Cost of Waiting for Interest Rates to Rise
Today’s interest rate environment presents financial advisors with a conundrum – do I stay on the sidelines and wait for rates to rise before re-allocating my clients’ portfolios, or do I jump in now….what are the costs of waiting for rates to rise? We evaluate this question in the context of income-matching portfolios constructed with individual bonds. Income-matching portfolios consist of a series of individual bonds held to maturity whose redemptions and coupon payments provide cash flows that precisely match a client’s target income stream. We will compare the income-matching strategy to investing in short duration bond funds, holding cash or buying a CD to show it is better for investors to buy now than wait for rates to rise. Download Now…