Salient to Investors: A fund is highly correlated to its benchmark index if its R-squared reaches 90: at 95, it is considered a ”closet” index fund. The steady rise in correlations among all stocks is making it more difficult than ever for actively managed funds to differentiate themselves from their benchmarks. Morningstar
READ MORE... →Salient to Investors: U.S. investors are buying Treasuries at a faster pace than foreigners for the first time since 2010. Tom Graff at Brown Advisory said bonds have stopped being a total-return market as high uncertainty has caused excess cash to build up among household assets as individuals seek safety over return. Foreign investors own 50.4
READ MORE... →Salient to Investors: Chad Morganlander at Stifel Nicolaus said a structural shift in China’s economy and European economic woes will pressure commodity prices – China over the last few years artificially torqued its economy. China is the world’s biggest consumer of everything from copper to pork to soybeans, while the U.S. is the largest user of crude oil and
READ MORE... →Salient to Investors: Toru Higuchi at Japan’s Teachers’ Mutual Aid Co- operative Society will start investing in REITs and hedge funds. Japan’s has the world’s second-largest retirement pool, after the U.S., with only 6 percent in alternative assets versus 25 percent in the U.S. and 24 percent in Australia. Read the full article at
READ MORE... →Salient to Investors: Morningstar reported that investors withdrew $300 billion net from actively managed U.S. equity stock funds in the 3-yr period through July 31, while buying a net $140 billion of passively managed funds and ETFs, and bond funds took in $734 billion. $3 trillion-plus is invested in equity mutual funds and ETFs.
READ MORE... →Salient to Investors: EPFR Global report junk-bond funds saw inflows of $3.63 billion last week, the biggest rise since the week ended Oct. 26 2011 – Junk ETFs accounted for 40 percent of all U.S. flows. Matthew Tucker at BlackRock said more institutional investors are buying ETFs causing a scarcity of bonds. Most bond proceeds
READ MORE... →Salient to Investors: Mark Smallwood at Deutsche Bank said gold is increasingly being used as a monetary instrument as more high net-worth individuals seek to protect their wealth from the risk of rising inflation, with an increased preference for physical holdings. Holdings in gold-backed exchange-traded products reached an all-time high yesterday. Bank of America said
READ MORE... →Salient to Investors: Bloomberg reports the overall bullish outlook of analysts extended for an 18th week. Buyers bought the more exchange traded products this quarter than in two years. Hedge funds et al more than doubled net-long position since July 24 to the most since Feb. 28. Bank of America predicts gold at $2,000 by
READ MORE... →Salient to Investors: Options traders are paying record prices to protect against swings in long-term U.S. Treasuries relative to stocks amid concern inflation will accelerate. The ratio between implied volatility for contracts closest to the iShares Barclays 20+ Year Treasury Bond Fund and the SPDR S&P 500 ETF Trust reached the highest since
READ MORE... →Salient to Investors: Net buying of long-term U.S. equities, notes and bonds totaled $67 billion during July versus $9.3 billion in June. Guy LeBas at Janney Montgomery Scott says European investors bought Treasuries et al to protect against deterioration in the euro financial markets, and this will continue into August. China holdings of U.S. Treasuries in July rose $2.6
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