ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

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2014-02-20 Peer Group Analytics and Valuation, an Abstraction by David Kleinberg of Universal Orbit

Peer group analytics and valuation are essential components when assessing the optimal risk-return equation. As opposed to an efficient frontier populated with the regressed correlated expected future returns of conventional securities or asset classes perhaps one determined by business segment operations is more advantageous.

2014-01-31 Do Portfolio Diversifiers Belong in Client Portfolios? by Roger Nusbaum of AdvisorShares

The big idea is that the stock market goes up more often than not but when it does go down it scares the hell out of clients. During these large declines some advisors will use tools like gold, hedge fund replicators, absolute return, market neutral, funds that sell short or any other products that tend to not look like the stock market to try to spare clients from the full effect of the decline.

2014-01-23 EPV: Establishing Predictive Value (i.e., Demand Characteristics) by David Kleinberg of Universal Orbit

EPV: Establishing Predictive Value (i.e., Demand Characteristics) is designed as a complement to quantitative portfolio strategies and fundamental research. Continuing the thread from EPV:RO, tested is the premise of structural bias in performance benchmarks as determined by third party data vendors with implied effects on peer group analytics and valuation.

2013-08-07 Thoughts on the Long/Short Space by Kurt Voldeng of AdvisorShares

This insight from Kurt Voldeng highlights performance in the long/short fund universe.

2013-07-02 Finding Value In The Materials Sector Is A Material Thing by Chuck Carnevale of F.A.S.T. Graphs

This is the third in a series of articles designed to find value in today’s stock market environment. However, it is the second of 10 articles covering the 10 major general sectors. In my first article, I laid the foundation that represents the two primary underlying ideas supporting the need to publish such a treatise. First and foremost, that it is not a stock market; rather it is a market of stocks. Second, that regardless of the level of the general market, there will always be overvalued, undervalued and fairly valued individual stocks to be found.

2012-12-10 13 for '13 by Richard Bernstein of Richard Bernstein Advisors

Each December we publish a list of investment themes that we feel are critical to the coming year. We continue to believe that US equities are in the midst of a major bull market that could ultimately rival 1982's bull market. It is hard to be bearish when one considers the following.

2012-10-12 Long/Short Investing: Bon Apptit by Geoffrey Johnson of PIMCO

Long/short equity is a distinct investment approach that seeks to reduce downside risk while still capturing much of the equity markets upside potential. By removing the long-only constraint, long/short managers have an expanded opportunity set with the potential to generate returns and mitigate risk from both long and short investment ideas. Long/short equity strategies have a lower long-term volatility and risk profile than the market as a whole and have captured a good percentage of price movement in up markets and a smaller percentage in down markets.

2012-06-04 Alternative Mutual Funds See Continued Growth by Chris Maxey and Ryan Davis of Fortigent

During an especially difficult week, global equity markets were deep in the red, as the S&P 500 Index lost 3.2% and the Dow Jones Industrial Average fell 3.3%. There was no shortage of disappointing data during the course of the past week, ranging from weakness in the ISM manufacturing survey to an underwhelming May labor market report. It was such a bad week, in fact, that Bespoke Investment Group found that 18 of the 21 economic indicators released in the U.S. fell short of expectations.

2012-04-25 Avoiding Equity Market Exposure by Team of American Century Investments

The year 2012 finds the search still on for income and capital appreciation with acceptably low volatility. Many investors remain leery of stocks and are also interested in opportunities that possess low correlation to equity markets. In addition, the low interest rate environment presents difficulties for those trying to achieve total return goals by relying on fixed income investments. Given these issues, some may wish to learn more about the techniques utilized by many equity market-neutral (EMN) strategies.

2012-03-09 Long-Short Funds Lead Greenwich Indices in February by Clint Binkley of Greenwich Alternative Investments

Hedge funds turned in another month of gains across all major strategies, notes Clint Binkley, Senior Vice President. Results from Long-Short Equity funds show that managers are increasing net exposures as they become more confident about economic conditions. Although some managers continue to expect a market correction, most believe it will be mild as institutional investors are still waiting for opportunities to add to their positions.

2012-02-23 Muni Outlook Q&A with Portfolio Manager Alan Kruss by Team of American Century Investments

Municipal bonds (munis) are back in the bond market spotlight, but for different reasons than a year ago (when widespread defaults were projected, and muni funds experienced heavy outflows). Muni performance has rebounded strongly since then, which has triggered follow-up questions about the muni market outlook. We posed them to Alan Kruss, Vice President and Municipal Portfolio Manager at American Century Investments.

2012-02-16 Weekly Market Update: Introduction to Alternative Investments by Team of American Century Investments

Alternative investments (or alts as they are commonly known) have exploded in popularity in recent years. What began as specialty investment strategies utilized by only the most sophisticated institutional investorssuch as pension plans and university endowmentsare now readily available to retail investors through a number of mutual funds and exchange-traded funds. Here we try to explain alts appeal in broad terms, discussing how these strategies are used and what role alts may play in an individual investors portfolio.

2012-02-10 Indices Show Hedge Funds Off to Strong Start in January by Clint Binkley of Greenwich Alternative Investments

"US equities rallied significantly to begin 2012 and Long-Short managers are the best performers thus far. Hedge funds focused on Market Neutral strategies were also surprisingly strong as both Arbitrage and Event-Driven managers posted their best results in months. Despite investors being drawn into risk-on sectors of the market, most funds remain cautious with the economic situation in Europe still unresolved, notes Clint Binkley, Senior Vice President.

2012-01-11 Greenwich Global Hedge Fund Index Slips 15 Points in December by Clint Binkley of Greenwich Alternative Investments

US equities ended 2011 essentially unchanged but endured significant volatility throughout the year. Hedge funds focused on market neutral strategies were above average performers for the month and the year as they were able to withstand the market uncertainty. Looking forward, we expect Directional and Long-Short strategies to have better performance as the global economy continues to stabilize

2011-12-09 Greenwich Hedge Fund Indices Post Modest Losses in November by Clint Binkley of Greenwich Alternative Investments

Hedge funds as measured by the Greenwich Global Hedge Fund Index posted losses in November, losing ground during the latter half of the month on weak fundamentals in European markets. The GGHFI shed 1.05% compared to global equity returns in the S&P 500 Total Return (-0.22%), MSCI World Equity (-2.69%), and FTSE 100 (-0.70%) equity indices. European headlines continue to dictate the mood of global markets and cause increased volatility in equities. Hedge fund managers have decreased leverage and exposure to mitigate market risk but are still exposed to broader moves

2011-11-09 Greenwich Global Index Hedge Funds Bounce Back in October by Clint Binkley of Greenwich Alternative Investments

Hedge funds as measured by the GGHFI posted strong results in October, benefitting from a rebound in equity prices during the month. The GGHFI gained 2.27% compared to global equity returns in the S&P 500 Total Return +10.93%, MSCI World Equity +10.26%, and FTSE 100 +8.10% equity indices. 67% of constituent funds in the GGHFI ended the month with gains. Concerns over Europe began to lift in October and hedge funds were able to benefit from the rise in equity prices. Long-Short managers performed well given their cautious stance entering the month.

2011-09-30 Is a More Integrated Europe the Answer? by Andrew Goldberg and David M. Lebovitz of J.P. Morgan Funds

Germany has voted for an expanded EFSF to stabilize the European Sovereign debt crisis, an important step towards reducing near-term concerns. However, broader problems still loom. In recent weeks, mounting skepticism has exacerbated fears of recession in developed economies, sending risk assets plunging and volatility soaring. In the following update on the situation in Europe, well consider: The underlying issues plaguing Europe, A summary of steps taken to address them thus far, A look at possible next steps and solutions and a few thoughts on investing in such difficult times.

2011-09-09 Hedge Funds Minimize Losses in August by Team of Greenwich Alternative Investments

Hedge funds turned in an excellent month of relative performance when compared to equity market benchmarks, notes Clint Binkley, Senior Vice President. Macro, Futures and Short Biased managers produced positive returns in spite of severe market declines. We continue to expect hedge funds to outperform long only strategies in this volatile market environment. Hedge Fund Strategy Highlights: Directional Trading funds are the best performing group of funds in August, gaining 0.3%. Market Neutral funds provide protection from market swings, declining only 2.9% on average for the month.

2011-09-06 Five Strategies for a Sideways Market by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)

If this slow growth environment coupled with asset price volatility continues for (to steal a quote from Fed Chairman Bernanke) 'an extended period,' what additional portfolio strategies might aid the overall risk/return profile of investor portfolios? More specifically, how do you manage investments in a sideways market?

2011-05-31 Letter to the Editor On Absolute Return, Market Neutral and Long-Short Funds by Todd Huster (Article)

A reader responds to a market commentary, What is conservative about Absolute Return, Market Neutral, or Long/Short Mutual Funds?, by Kendall Anderson of Anderson Griggs, which appeared on May 23, 2011.

2011-05-24 What is conservative about Absolute Return, Market Neutral or Long/Short Mutual Funds? by Kendall J. Anderson of Anderson Griggs

The machine of Wall Street has convinced many individuals who believe they are prudent, conservative, investors that a mutual fund whose name or objective includes the terms Absolute Return, Market Neutral, Long/Short or hedged, will never lose your money. An individual whose fear of losing again from common stocks just can’t bear sitting on cash and earning a nickel of interest every three months 1k. The desire to increase returns is just too great. Before you fall for the hype there are a few things you should know. The most important item you should remember is that there is no guarantee.

2011-05-16 Public Policy Looking Better by Brian S. Wesbury and Robert Stein of First Trust Advisors

We think there are five (5) reasons to be bullish about the US economy. First, monetary policy is loose and likely to remain so. Second, the financial panic is over, thanks to the end of mark-to-market accounting rules. Third, technological advances continue to boost productivity growth. Fourth, our free market economy is incredibly resilient, more so than the pessimists believe. And fifth, the policy environment is improving. Despite what Bernanke might say (that quantitative easing lifted stock prices), we think the return in the S&P 500 has to do with a positive shift in government policy.

2011-05-03 Q1 2011 Portfolio Commentary by Jay Compson of Absolute Investment Advisors

In a nutshell, the Fed-induced "risk trade" is once again at a crossroads with commodity/oil prices and the real economy. You know the endgame is near when the Bernanke/Yellen team dismiss the "bad stuff," much like they did with sub-prime. Investors should be prepared for a possible reversal of some of the above trends as they relate to the US dollar, European Union difficulties, and the potential ending of the credit boom across Asia. Given the high sensitivities and correlations across most global asset classes, diversification can be incredibly difficult.

2011-04-08 Hedge Funds Show Mixed Results Among Strategies in March by Clint Binkley of Greenwich Alternative Investments

Most hedge funds advanced in March, but losses in Directional funds dragged down the group. The Greenwich Global Hedge Fund Index shed 10 basis points compared to global returns in the S&P 500 Total Return +0.04%, MSCI World Equity -1.24%, and Barclays Aggregate Bond +0.06% indices. 58% of constituent funds in the GGHFI ended the month with gains. “The whipsaw action in the market during March led many trend following funds to suffer losses latter in the month,” notes the Sr VP “The outlook for managers is positive as increased volatility tends to work in favor of most hedge fund strategies.”

2010-09-13 And a Partridge in a 'Pair' Tree by Jeffrey Saut of Raymond James Equity Research

We've gone from double-dip to double-drip. While the economy is slowing, a slide back into recession is unlikely. Chances of deflation have also deflated. Meanwhile, last week the Labor Day Indicator sounded the 'all clear' signal when the S&P 500 closed higher over the four days following the holiday. Unless the S&P violates its 50-day moving average of 1085, followed by a break of 1060, the path of least resistance for stocks remains up. Still, investors continue to shun stocks, leaving the equity risk premium exceptionally large.

2010-08-17 Letters to the Editor: Harold Evensky, et. al. by Various (Article)

Our letters to the Editor include three responses to articles in last week's issue from Harold Evensky of Florida-based Evensky & Katz.

2010-08-10 When Active Management Matters by Kenneth R. Solow, CFP and Michael E. Kitces, MSFS, MTAX, CFP (Article)

Financial planners have eagerly awaited any research that could finally, definitively prove - or disprove - the pesky notion that active management is effective. Though no one has yet risen to that challenge, past academic studies have been improperly interpreted to show that portfolio policy, or asset allocation affects portfolio returns far more than active management. As Ken Solow and Michael Kitces write in this guest contribution, the most recent study to tackle the active management debate, by Yale professor Roger Ibbotson, shares two weaknesses with previous research.

2010-07-24 The Artificial Economic Recovery by Tony and Rob Boeckh of Boeckh Investment Letter

Economic recovery in the U.S. and elsewhere has slowed rapidly and forecasts are being downgraded accordingly. The massive stimulus packages stopped a self-feeding downward spiral, but they have given us only an artificial recovery. Government tax revenues will be disappointing and expenditures will remain elevated. A fragile economy, however, should not push investors away entirely from risk assets. High levels of risk and uncertainty argue for continued focus on wealth preservation and sound diversification.

2010-04-29 Q110 Portfolio Commentary by Jay Compson of Absolute Investment Advisors

The potential for systemic risk continues to be very high, and Absolute Investment Advisors believes markets are only pricing in the optimistic outcomes and not the bad ones. This is the opposite of a year ago. The past few market cycles have been highly compressed as investors have appeared to recognize risks only after they occur. As such, the discounting mechanism of the markets has also become compressed as all assets have gone through stages of an escalator up and then an elevator back down (with very few floors to get off).

2010-04-07 When the Facts Change by Niels C. Jensen of Absolute Return Partners

An echo bubble is upon us. Echo bubbles are the children of primary asset bubbles, and emerge when monetary authorities respond to the bursting of a primary asset bubble by slashing policy rates. Extraordinarily low interest rates are currently encouraging another bout of excessive risk taking. If policymakers raised rates now, however, they would almost certainly kill the fledgling recovery. The pressure is therefore on monetary authorities to keep rates low and feed the new bubble. Investors should steer toward assets that benefit from high volatility.

2010-02-02 Stuck in One Dimension by Tom Brakke, CFA (Article)

Tom Brakke writes about the lessons in the demise of Tiger Woods for those seeking "star" investment managers. Relying on funds run by a single individual can be perilous.

2010-01-29 Q409 Portfolio Commentary & Updated Fact Sheet by Jay Compson of Absolute Investment Advisors

“Beyond just our economic, fiscal, and underemployment problems, we are likely to see a reversal of three decades of tailwinds that will turn into large headwinds: deleveraging, higher taxes, re-regu


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