In periods of elevated volatility such as the fourth quarter of 2018—when we saw the largest quarterly decline in the U.S. market, as measured by the S&P 500, since the third quarter of 2011—investors have many opportunities to harvest losses. Preserving tax benefits by avoiding wash-sale violations becomes even more important during these periods. However, there are occasional circumstances that make wash sales unavoidable. It's important to understand why they occur and why they aren't necessarily a negative.
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The robust steps taken by the Federal Reserve to shore up the front end of the money markets are essential to the free flow of capital and global economic stability. Whether the Fed will bring back some of its financial crisis-liquidity and lending facilities to address the escalating Coronavirus crisis in the financial system, the bottom line is that well-functioning money markets are necessary for commercial activity.
In a world of low expected returns, finding alpha becomes more important than ever. Given the significant amount of capital looking for alpha in private markets, family offices will need to bridge the performance gap in this slower growth environment by leveraging their longer time horizon and partnering with experts in private market investments. Alpha, while elusive, can be found if one knows where to look.
In a time of equity market volatility, municipal bonds are doing what they’re supposed to do: diversify portfolios. Learn what may come next in the muni market.
From a historical perspective, the odds for a strong volatility risk premium (the "VRP") in 2020 are in your favor. Although it can't be predicted with any level of certainty the returns derived from exposure to the VRP this year, the range of likely outcomes can be determined based on empirical evidence while respecting known and unknown sources of uncertainty. If you're willing to wait and see, history suggests you'll be compensated.
The equity markets took a painful hit at the end of February this year as fears about the coronavirus drove investors out of stocks and into correction territory. As one would expect, the impact and outlook for each asset class varies based upon the underlying exposures, market drivers, and pricing dynamics. We summarize the developments surrounding the market stress resulting from the coronavirus and provide specific commentary on what to watch for across the major asset classes that constitute investor portfolios.
As families explore investment opportunities in real property, many are turning to farmland for a portion of their portfolio. It is a unique class of real property that performs best as a long-term hold that carries with it a counter cyclical performance to stock investments. The application of best practices in this different type of ownership will help ensure quality planning and investing.
Shareholder engagement is not a new activity, and it is on the rise in 2020 as millennials continue to drive more interest in responsible investing. Today’s investors see the shareholder engagement as an even more powerful tool—one that can have a direct impact on corporate behaviors and business activities, and therefore, general society.
In this exclusive chat with Mellody Hobson, the President and co-CEO of Ariel Investments, speaks candidly about the importance and value of diversity in finance—how being color brave can improve business and society at large. Mellody shares personal stories and lessons learned from her investment career, including the disconnect that is felt between the diversification of investment portfolios and the lack of it in the hiring process in the industry. She also discusses investment trends and the empowering gift she received at the start of her career.
Despite reduced return expectations in 2020, municipals should remain a valuable building block of an investor's portfolio due to their attractive tax-adjusted yields, diversification benefits, and improving credit characteristics. For investors in high tax brackets, municipals are a great place to get it.