FINANCIAL ADVISOR INSIGHTS: Randomly Investing In Emerging Markets Isn't Going To Fly Anymore
Oct 24, 2014, 03:46 IST
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Randomly Investing In Emerging Markets Isn't Going To Fly Anymore (Alliance Bernstein)
"It's getting harder to generate equity returns in emerging markets. Simply chasing the index - the so-called beta trade - won't do the job anymore," writes Sammy Suzuki.
In the past, it was easy to simply randomly invest in emerging markets and get returns. Now, investors will have to carefully look through options "with a discriminating eye," writes Suzuki.
Investors should focus on finding specific companies that have great presence within the emerging markets. One such example that Alliance Bernstein analysts reference is the South African discount-apparel retailer, Mr Price Group. The company has posted earnings growth of 24% per year for the last 10 years, even though the South African economy has been stagnant.
It's Wrong To Consider Active Management Just Because It Involves A Market That You Think Is Inefficient (Vanguard)
Investors often manage their large-cap US stocks passively, but actively manage small-cap and international markets because they are less efficient. "Vanguard does believe in the potential for low-cost, talented active management to add value," but choosing active because a market is inefficient is incorrect, argues Chris Phillips.
Vanguard recently conducted research on indexing, which included "dead funds", or funds that were either merged or liquidated. They found that once dead funds were considered, 84% of actively managed small-cap US funds, 73% of developed non-US, and 71% of EM funds underperformed the average return of low-cost index funds in the same categories over 10 years.
"By my count, that's three out of every four funds that failed to deliver on the theory that these markets are less efficient and therefore ripe for performance. Compare that to large-cap US stocks, where 85% of funds underperformed," writes Phillips.
Those Transitioning To Advisory Roles Will Have More Managerial And Long-Term Duties (Investment News)
Not everyone starts out as a financial advisor - some people transition to or graduate to that role over the course of their career. There are several major changes that a career-changing adviser will experience. First, days will be "less reactive and task-oriented," writes Stacy J. Caudill.
"Certainly, I have things to do, but I now have a more proactive and holistic approach to my day. In addition, I am comfortable assigning tasks to our sales assistants, which in turn, helps me with what I need to accomplish," she writes.
Assisted Living Communities Are The Cheapest Option For Elderly Care (Financial Planning)
For the most part, seniors would rather stay in their own homes than move in to elderly care institutions. But as costs for elderly care continue to rise, it's important to consider the financial side of things, too.
Assisted living communities are the cheapest options and offer a "compromise" between living at home and being at a nursing home. "Clients get medical supervision and daily living assistance in a home-like environment," according to Financial Planning. The costs are around $90 per day, or $32,568 per year.
Nursing homes and in-home care are both more expensive. At times, in-home care can be more expensive than nursing homes. However, it's important to note that the location of the nursing home or assisted living community will greatly affect the price. Homes in Long Island, for example, cost twice as much as those in Chicago.
The Two Fired Merrill Lynch Advisors Are Heading To Stifel Financial (The Wall Street Journal)
Last month two high-powered financial advisors - Stephen Brown and James Goetz - at Merrill Lynch were fired after they allegedly violated their firm's policies. The reasons behind the advisors' terminations are still unclear.
However, that hasn't stopped the two from making a move. Several firms were vying for the two advisors, and ultimately Stifel Financial Corp. has picked them up.
At Merrill Lynch, the advisors managed $2.5 billion in client assets, reports Michael Wursthorn.