How’s this for a potential recipe for disaster: combine fixed income investing (which is receiving historic inflows) with emerging market investing (which has also seen strong inflows).
Is the fast growing but relatively new asset class of emerging market bonds leading investors into a big flop or will it ultimately prove to be an investment opportunity? Examine the charts below to prep yourself and I’ll join you after the break.
With Gold trading at record highs, I thought it would be interesting to take a step back and review the performance of three different asset classes dominating the news this year: Gold, Stocks and Real Estate. I used the following respective ETF proxies: GLD, SPY and VNQ (the largest REIT ETF at approximately $5.6bil in AUM). What I found took me a bit off guard! Check out the chart…
Ideally, most income investors would stick to the science of investing and ladder their income portfolio to deal with the potential for rising rates and to add another measure of portfolio diversification. Here’s a quick summary of laddering from investopedia:
However for a variety of reasons — cost, lack of expertise, size of funds — most investors are not implementing a laddered strategy.
In the last year, two different product suites have launched in the ETF space allowing investors to access laddered income investments in the Municipal and Corporate bond areas. These suites of products are low cost, professionally selected and are accessible to smaller portfolios. They are hidden gems in an ocean of poor alternatives and in many cases will give income investors what they want and what they need. Continue Reading