An Introduction to Stable Value Funds

Posted on February 10, 2012 by

What is a stable value fund? Stable value is an asset class that is designed to provide capital preservation and stable returns regardless of market volatility. The structure of a typical stable value portfolio seeks price stability similar to a money market fund while providing the return potential of a short to intermediate term bond fund. Objectives of stable value: Preservation of capital Stability of returns Liquidity to pay plan benefits Benefits of stable value: Relatively low risk – less market risk than most stock and bond funds Low market volatility – less volatile than most stock and bond funds Designed … Continue reading →

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The 99% Movement in the US

Posted on January 30, 2012 by

Despite early indications that the Occupy Movement was a Tower of Babel, it now seems to have found its core purpose, conveniently in time to lend a hand in the 2012 election contests. Theme: the top 1% of US taxpayers must begin to pay a “Fair Share” of the nation’s tax collections. After further consideration, instead of focusing on the 1%, they decided to align with the President’s long standing definition: any married couple earning more than $250,000 is “rich”. More recently, we have learned that what’s fair is a rich-tax rate that is at least equal to the aggregate … Continue reading →

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Useful or Useless Calendar Year Returns

Posted on January 27, 2012 by

Every year, as the expiring calendar comes off the wall to make way for its replacement, the world of people and institutions who care about investments (whom does that leave out?) performs a ritual that has the apparent purpose of appraising and evaluating their year’s returns. The standard 12-month performance look-back typically creates either a proud glow, or a sheepish confession, despite the fact that most of what happened was delivered by the marketplace, rather than by the sweat of yours or anyone else’s brain. Investments, after all, do not care whether you, or we, have keen interest in an … Continue reading →

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Gregg Buckalew in January 2012 CFA Magazine

Posted on January 16, 2012 by

Gregg Buckalew of FiduciaryVest was quoted in the January issue of CFA Magazine for his response to Point / Counterpoint: Agree or Disagree: The Chinese renminbi (RMB) will emerge as an international reserve currency sooner rather than later. DISAGREE: The RMB will join the global array of traded currencies, but the notion of a single reserve currency no longer works and will be abandoned. Instead, the International Monetary Fund and others will soon establish a currency basket to provide assurance that the political perils and fiscal irresponsibility of one nation (or currency bloc) will no longer threaten to disrupt the orderly … Continue reading →

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The EU Comes of Age (And May Be Coming Apart)

Posted on November 8, 2011 by

The European Union (EU) of 27 countries was formed as a sort of united states of Europe and, since 1999, 17 of them (the Euro zone) have the Euro as their currency. Euro zone membership ranges from Germany and France to tiny Estonia, Slovakia, Slovenia and Malta. (Six of the smallest Euro zone members collectively generate only about 2% of the Euro zone’s total GDP.) Four significant members… Britain, Poland, Sweden and Denmark… did not adopt the Euro currency. And, in keeping with its tradition, Switzerland not only did not adopt the Euro, it isn’t an EU member, even though … Continue reading →

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Are Bank Loans a Partial Replacement for Bonds?

Posted on September 14, 2011 by

 Unlike most government and corporate bonds, bank loans carry a variable rate of interest. In periods of rising interest rates the market values for bonds will likely fall. Bank loans are not subject to the same interest rate risks and will likely hold their value in rising rate market conditions. Additionally, the historical returns in bank loans are negatively correlated to US Government and broad bonds, due in part to the variable rate structures embedded in the bank loans. The impact on portfolio values and returns from the current and anticipated market difficulties in traditional bond markets could be moderated … Continue reading →

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Auto Enrollment and Auto Contribution Escalation

Posted on August 10, 2011 by

Auto enrollment and auto contribution escalation features are being used increasingly by employers to boost participation rates and to get participants deferring more income over time in a way that’s as painless as possible. We have seen with our own clients – especially when used together – that these features have been largely successful. According to a survey in 2010 commissioned by AARP, only 42 percent of employers surveyed used auto enrollment and 28 percent used auto escalation. So if these features are so great, why wouldn’t employers always decide to use them? A recent discussion with one of our … Continue reading →

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US Economy…Easing on Down?

Posted on July 30, 2011 by

While the entire political structure of the US Government has wrangled numbingly on over the inadequacy of its $14 trillion debt-ceiling, little attention is being paid to the fact that America’s number one problem is still jobs, jobs, jobs. Contrary to universally believed recovery expectations, the problem is recently growing. June numbers tell us that the current 58% employed population is actually below the level of two years ago. Well over 20 million of us need a job, or a better-paying one. Jobs are not just another four-letter statistical word. Nor are jobs a mantle to be worn by politicians … Continue reading →

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Treasury Inflation Protected Securities (TIPS)

Posted on July 8, 2011 by

TIPS are “full faith and credit” US Treasury bonds issued with coupons which are below the market rate for conventional Treasuries of similar maturity, due to their special characteristics. A TIPS bond automatically increases its principal amount annually, according to the inflation rate as measured by the Consumer Price Index in the preceding year. Because an investor’s initial interest return will be lower than for other US Treasury or corporate bonds, one should not invest in TIPS, unless you expect to hold them through a number of years, during which time, you also assume and believe that the cumulative escalation … Continue reading →

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Is PIMCO a Reflection of US Debt and Currency Turmoil?

Posted on April 30, 2011 by

In recent months, the all-time king of the bond-hill, Pacific Investment Management Co ($1 trillion under management), disclosed that its highly popular, consistently market-beating Total Return Bond Fund ($236 billion) had sold all of its US Treasury holdings. In late 2007, PIMCO had loaded up on Treasuries, before the 2008 financial crisis, a maneuver which turned out to be nicely profitable for the fund’s investors. In fact, this fund recently went even further: it moved to a modest short position in Treasuries and has re-deployed some assets into the debt of Mexico, Brazil, Korea and Russia, while taking currency exposures … Continue reading →

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