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The One Risk That All Muni Investors Need To Understand
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The One Thing Muni Investors Need To Get A Handle On (Morningstar)
Muni bonds had a rough year in 2013 with the Detroit bankruptcy, and risks surrounding Puerto Rico debt. But they've recovered in 2014. Eric Jacobson, a senior fund analyst at Morningstar, says that even after the current rally, muni bond valuations "are still probably a little generous relative to what they otherwise would have been, thanks in part to the sell-off over the summer."
The most important thing for muni investors to consider is the volatility this could bring to their portfolios. "I think one of the most important things for muni investors to try and get a handle on is what kind of volatility they can expect in their portfolios — if not being able to look through a crystal ball at the credit market necessarily — at least to try to understand what kind of interest rate risks they're carrying around," Jacobson said.
"Especially when they're buying longer bonds, that tends to be where a lot of the issuance concentrates. And even though, as I said, we've had outflows in January from the long-term muni portfolios, that in and of itself may trigger some people to want to get in. We also know, anecdotally, that people tend to look at muni funds more at the beginning of the year when tax season is upon us. So, you just really want to understand that if you're buying a long-term muni fund, in general, you're dealing with a bit more rate sensitivity than you would be with a core taxable fund because [the muni] market skews much longer."
Cantor Fitzgerald's Wealth Management Unit Is In Aggressive Acquisition Mode (Investment News)
Cantor Fitzgerald's wealth management unit is buying First Commonwealth Financial Advisors' registered investment advisory (RIA) firm with $2 billion in assets, reports Tervor Hunnicutt in Investment News. Stan Gregor, president and CEO of Cantor Fitzgerald Wealth Partners told Hunnicutt that they are in "a very aggressive acquisition mode." The unit already added four teams since September.
"We have a significant presence on a global basis, and in the institutional space we have tremendous infrastructure. Certainly from a standpoint of adding a business we felt that the wealth management arm would be something that would be a logical one because we trade every security in the world," Cantor Fitzgerald CEO Shawn P. Matthews said.
JP Morgan Hires Advisors With $1.6 Billion In Client Assets (Reuters)
JP Morgan's wealth management unit has hired six advisors from UBS, Merill Lynch, and Bernstein Global Wealth Management, reports Reuters. Roland Pritchett and Matt Stucke join the team from UBS. Darren Graff and Natalya Muravchik are moving from Merrill Lynch. And Kevin Baker and Dan Sullivan are headed over from Bernstein Global Wealth Management. Collectively, the six advisors managed $1.2 billion in assets at their old firms.
The Stock Market Isn't That Expensive When You Consider Inflation (Guggenheim Partners)
Some argue that the stock market is expensive and point out that the market's price-earnings (P/E) ratio is high relative to its long-run average. But, "low inflation tends to support larger price-to-earnings ratios, as the lack of price pressure facilitates easy monetary policy which encourages multiples expansion," Scott Minerd of Guggenheim Partners wrote in his weekly commentary.
"Though the P/E ratio of the S&P 500 has been on an upward trend in recent years, historical ranges suggest there is further room for expansion due to low inflation. With inflation expected to remain below the Fed’s target through 2015, the P/E ratio could rise as far as 24X and still remain within historical norms."
Guggenheim Partners
How Men And Women Invest Differently (BlackRock Blog)
Nelli Oster, investment strategist in BlackRock's Multi-Asset Strategies Group, points out three key differences in the way men and women invest. 1. "Women tend to focus more on longer-term, non-monetary goals. …Men, on the other hand, who tend to be more competitive and thrill-seeking by nature, often focus on the short-term track records of their portfolios. 2. "Women tend to be thorough and take more time to make decisions than men." 3. "Women seek help more."
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