Asset Class Defined

The preponderance of low interest rates has created an environment in which product providers offer investors new asset classes to diversify their risk, but a recent article in CFA Institute argues that the new alternatives don’t really provide additional diversification and that, in fact, “we don’t need many different asset classes in our portfolios.” The article defines an asset class as “a group of assets with similar exposure to the fundamental drivers of the economy,”… Read More

A “Protective” Alternative to the 60/40 Portfolio

By Justin Carbonneau (@JJCARBONNEAU) As this Forbes article points out, the 60/40 portfolio is “one of the most dominant investment approaches of our time”. This asset allocation is incredibly simple and it’s worked, but with U.S. stocks up nearly 350% off the 2009 lows and interest rates at historical lows, some investors are wondering if the 60/40 stock/bond portfolio has the same risk reduction and return benefits as it has in the past. This article… Read More

In Private Equity, the Past May Be a Guide to Future Results

A new study supports the notion that private equity and venture capital managers that “do well with one fund are more likely to do well with the next,” according to a recent article in The Wall Street Journal. The study, conducted by data company PitchBook, supports data reflected in several academic studies, the article says. However, the question remains as to whether performance comes down to a firm’s methods or the talent of individual deal makers.… Read More

Inflation’s Effects on Asset Returns

The results of a study on asset performance during periods of both low and high inflation are presented in this month’s issue of AAII Journal by Craig Israelsen Ph.D and developer of the 7Twelve Portfolio The median level of inflation used was 3.29%, as it allowed researchers to divide the 46-year period between 1970 and 2015 in half: 23 years with below-median inflation and 23 years with above-median inflation. Findings showed that during the period of low… Read More

Markets Moving in Tandem is Unusual

Major markets are moving together more than usual which, given this period of high valuations, is raising concerns that even a slight pullback could cause significant, negative repercussions, according to a Wall Street Journal article from earlier this month. The article explains that investors have been “backing away in recent weeks from some of the year’s hottest trades” as gains in stocks, bonds, gold and low-volatility funds have started to reverse. The worry is that… Read More