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Oftentimes, an investor may be especially averse to risk on an emotional level, but their need to take more risk in order to reach investment goals may be lost on them. Advisors need a way to reconcile this concept to their clients. How do you make a client understand this relationship between risk and return in a constructive way?

Yon Perullo

30 Jul 2019

Inverted Yield Curves Revisited

I wrote about yield curve inversions back in November 2018. At the time the US yield curve was flattening, but resisting inversion. By the most common measure of inversion, the yield on the 10-year Treasury minus the yield on the 2-year Treasury (10-2). The graph below shows the 10-2 spread prior to the last recession through June 2019, and as can be seen, the spread is quite narrow but has resisted inversion. But readers who follow such things will note that by some measures, the yield curve has already inverted. In fact several maturities have inverted: 10-year minus 6-month, 5-year minus 2-year and some lesser followed short duration bonds have...

Nick Davidson

19 Jul 2019

How Target Date Defaults Affect Equity Allocation Exposure

Money market funds used to be common default investments for 401k plans. More recently, it is becoming more common for target date funds to be the default investment of choice. While it might make more sense to use a TDF as a default, How Target Date Defaults Affect Equity Allocation Exposure takes an interesting look at the unintended consequences.