But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Must-know takeaways for today’s corporate bond Investors
So is the recent growth in corporate bond borrowing a good thing? As Russ points out, it is a sign of increased borrowing and leverage in the economy, and if left unchecked, it could lead to financial challenges down the road.
Investors seeking exposure to investment grade or high yield corporate debt have increasingly been using fixed income ETFs.
Over the past six quarters, corporate debt has been growing at an average annualized rate of around 9.5%, which exceeds the pre-financial crisis average of 7.5%.
As my colleague Russ Koesterich mentions in a recent Blog post, deleveraging has taken place in the financial sector, but other segments have continued to grow and issue more debt.
Record low U.S. Treasury rates continue to push investors to find yield elsewhere, and it seems that corporations are rushing to meet the demand. Matt Tucker explains.
Finally, unconventional monetary policy of recent years has encouraged significant bouts of capital misallocation, resulting in crowded trades, correlated risks and the overly stretched valuations seen in markets today.
In recent years, the labor market has split into two segments thanks to a mismatch between the skills required for jobs and the skills that workers have.
Companies are taking advantage of extremely easy corporate financing conditions at the expense of reinvesting in organic business growth.
Excessively low rates are making it expensive for individuals to retire, as potential retirees view investment income generation from fixed income products as too meager to support a reasonable standard of living.
Like quantitative easing before it, the Fed’s zero interest rate policy may actually be inhibiting economic growth and job creation in unintended ways. Rick Rieder explains.
To feel more comfortable about investing in risky assets, consider focusing on how one’s overall wealth is doing rather than focusing on each asset in isolation.
Many investors tend to move in and out of positions in an inefficient way, reducing their potential profits. This may be because individual investors are often overly confident in their own abilities to beat the market.
Another common investor mistake is to have an under diversified portfolio. In a 1991 to 1996 study of the customers of a large US discount brokerage, more than 25% held only one stock and more than 50% held three or fewer stocks.
Why do some investors shy away from stocks? Behavioral finance studies have found that investors are roughly twice as sensitive to losses as they are to gains.
Do you avoid the stock market? Shun diversification? Trade inefficiently? Russ and guest blogger Nelli Oster — an investment strategist on Russ’ team — examine three common bad behaviors among investors.
With the exception of Indonesia and India, the major countries in Asia have generally sizeable current account surpluses. And even in the case of India and Indonesia, both countries have posted significant improvements in their current accounts.
Compared to other regions, emerging market countries in Asia appear to be experiencing a more pronounced cyclical upswing.
Despite some signs that Chinese growth momentum is reversing from previous highs, the Chinese economy is still growing at a decent pace and government officials seem committed to growth of around 7%.
EM Asia valuations are currently largely in line with their historical average, providing some room for future multiple expansion should EM fundamentals continue to improve.
Where in the EM world do I see opportunities? On a relative basis, EMs in Asia, including China, appear particularly attractive. Here are three reasons why.