Archive for 'November 2014'

    High Yield: Falling Oil Prices Highlight Need for Active Management

    December 9, 2014 4:50 PM by Stephen Hillebrecht

    Not all segments of the energy sector are affected equally. 

    While the decline in the price of oil has been well publicized over the past several weeks, recent reports have noted the possibility of a negative impact on the high-yield bond market. The energy sector is the largest component of this market, with a 15.3% weighting in the Bank of America Merrill Lynch High Yield Index. However, before drawing any conclusions about your allocation to high yield, further analysis is required.

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    Why Some Investors Might Holler for the Dollar

    November 28, 2014 10:54 AM by Lord Abbett Editorial Staff

    While past performance is no guarantee of future results, continued U.S. dollar strength bodes well for global equities.

    When a major institutional investor questioned how long the U.S. dollar’s strength could continue versus the flagging euro, three Lord Abbett partners—Leah Traub, Ph.D (an emerging markets debt and currency portfolio manager who provides support for the firm’s currency hedging strategies), Vincent McBride (responsible for establishing the strategy for the firm’s large cap international equity funds), and Harold Sharon (the firm’s international strategist)—responded quickly. Among their key conclusions:

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    The Gift that Keeps on Giving

    November 20, 2014 3:45 PM by Brian Dobbis

    A Roth IRA carries the potential for future tax-free income and could be the gift of a lifetime for a young adult.


    You are not likely to find this item on your teenager’s holiday wish list. In fact, most young adults don’t even know they want one, and typically they need a little time to fully appreciate it. But once they discover the potential power of this gift, their gratitude will be sincere. I’m talking about a Roth IRA—one of the rare gifts that really does have the potential to keep on giving.

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    IRAs: FAQs about RMDs

    November 13, 2014 3:50 PM by Brian Dobbis

    Investors who are required to take required minimum distributions (RMDs) from their IRAs generally must do so by December 31. Here are some things they should know.


    I’ve just returned from a week on the road, giving presentations to financial advisors. One of the most consistent topics of discussion focused on required minimum distributions from IRAs. RMDs are a highly specialized area of retirement planning, and due care should be taken to familiarize oneself with the maze of rules that apply. The consequences for missing an RMD are severe: a 50% penalty surtax assessed on the amount of the RMD that should have been taken.

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    IRS Finally Issues Much-Anticipated IRA Rollover Guidance

    November 6, 2014 12:31 PM by Brian Dobbis

    Confused about treatment of both pretax and after-tax dollars in a qualified plan? Taxpayers just received an early holiday gift from none other than the IRS.


    The IRS has issued much-needed guidance on the allocation of after-tax dollars to IRA rollovers in the form of Notice 2014-54, “Guidance on Allocation of After-Tax Amounts to Rollovers.” The ruling provides at least a roadmap for splitting a 401(k) distribution that consists of both pretax and after-tax dollars.  

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    Trying to Predict the Market? Tune Out the Equity Strategists!

    November 4, 2014 11:50 AM by Brian Foerster

    Even before the recent pullback, the market was lagging the growth in earnings. 

    Volatility has returned to the stock market, causing concern in some quarters. But this seems to be an overreaction, given the relative strength of the U.S. economy and the fact that even at the recent low of 1,862 in mid-October the S&P 500® Index was still slightly up for the year. Since then, it has rebounded to a new high. (Although, due to market volatility, the market may not perform in a similar manner in the future.)

    More important, investors need to view the recent volatility in a longer-term context. Two key statistics are worth noting: 1) annualized return and 2) average earnings growth.

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    Weighing the Pluses and Minuses of a Commodities Downturn

    November 3, 2014 12:30 PM by Leah G. Traub, Ph.D.

    Sure, sharp drops in commodities prices have hurt major producing countries that have not been able to diversify their economies away from commodities, but heavy importers should benefit.   

    People forget that more than half of the emerging markets universe is comprised of commodity importers. These countries are not just exporters, which generally suffer when commodity prices drop, and the market will start to differentiate if the price declines continue. One prime example is India, which should benefit tremendously from lower commodity prices, as at least 50% of India’s total imports are commodities. So should Turkey, which hasn’t been able to implement any kind of structural reforms to control its current account deficit that is dominated by an oil imbalance. 

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