Archive for 'May 2015'

    Roth IRAs: When It Pays to Use the Back Door

    May 29, 2015 10:55 AM by Brian Dobbis

    "Backdoor" Roth IRAs are a legitimate strategy for high-income earners who want to take advantage of tax-free earnings on retirement savings.


    One of my most-read blogs has been "Backdoor Roths: An IRA Strategy for High-Income Earners," which describes a popular strategy that allows high-income earners to establish Roth IRAs via a potentially tax-free conversion. In that blog, I discussed the essential strategy, its potential advantages, and possible pitfalls.

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    Will Driverless Cars Be Fast and Furious?

    May 27, 2015 11:00 AM by Lord Abbett Editorial Staff

    Technology is certainly burning up the track, but with a variety of speed bumps ahead, widespread adoption will likely be evolutionary, not revolutionary.

    Can driverless-car innovation transform a world rife with crumbling infrastructure, rush-hour gridlock, extreme weather conditions, unavoidable collisions, myriad insurance jurisdictions, massive recalls, and regulatory inertia? (And on a lighter, seasonal note, will such technology transform high school prom rituals like staying up all night to watch the sun come up?)

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    Is This a Window of Opportunity for Emerging-Market Currencies?

    May 22, 2015 10:40 AM by Leah G. Traub, Ph.D.

    The European Central Bank’s continuing commitment to quantitative easing eventually will boost the economies of emerging markets and support their currencies.

    With the European Central Bank’s (ECB) ongoing commitment to quantitative easing, we do not expect much more euro appreciation versus the U.S. dollar.  But a window of opportunity for emerging-market (EM) currencies versus the euro may be  on the horizon. And the recent support for EM currencies versus the U.S dollar remains in play, at least for the short term.

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    How to Handle IRAs in a Divorce

    May 21, 2015 1:50 PM by Brian Dobbis

    Dividing retirement assets when a marriage ends can be tricky because different rules apply for each type of account. Here are some guidelines to follow.


    I’ve recently returned from time on the road, during which I hosted a number of retirement seminars. Curiously, I received quite a few questions about how IRAs are handled during a divorce. I don’t know if this is a sign of an uptick in the divorce rate, but the correct answers are vital to those undergoing such a life-changing event. Below is a brief outline that a retirement account owner should follow when transferring retirement accounts pursuant to a divorce.

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    Global Warming to Solar Energy

    May 19, 2015 1:50 PM by Lord Abbett Editorial Staff

    Thanks to lower prices and greater efficiency of solar energy, more and more locations around the world are achieving grid parity, or better, and demand is booming. 

    According to a report for the National Bank of Abu Dhabi (NBAD) by the University of Cambridge and PriceWaterhouseCoopers, around $150 billion was invested globally in solar energy generation in 2014, and solar energy is poised to achieve grid parity1 in 80% of the world’s countries within the next two years.2

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    IRAs: When Consolidating Makes Sense

    May 15, 2015 11:00 AM by Brian Dobbis

    By combining multiple savings accounts, investors may get a clearer picture of where they are on the road to retirement. 


    Given that the average American may hold more than eight jobs over the course of his or her career, it’s more than likely that some of your clients have accumulated multiple retirement accounts, including IRAs, and employer-sponsored accounts, such as 401(k) or 403(b) plans. 

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    Can Institutional Investors Learn from Yale's Patient Approach?

    May 13, 2015 2:55 PM by Charles F. Hofer, CFA

    New active share research—and Yale's successful record with domestic and international equities—suggest that patience is rewarded.

    Yale's endowment fund has received much attention for an approach to asset management that has proven highly successful during the past 20 years. Over this period, the endowment has posted returns averaging 13.9%, according to the endowment's latest annual report. Much of the success has been attributed to chief investment officer David Swenson's preference for illiquid alternative investments, such as timberland and private equity. [Of course, alternative investments are not without risks. These can include: investment risk, liquidity risk, operational risk, and organizational risk. And, as with all investments, past performance is not a guarantee of future results.]

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    SIMPLE IRA Distribution Rules Actually Are Not

    May 7, 2015 3:40 PM by Brian Dobbis

    As with other types of individual retirement accounts, SIMPLE IRAs are subject to rules governing withdrawals—but they have one caveat the other types do not.


    SIMPLE IRAs are designed specifically for small businesses and their employees. They are relatively easy to establish and maintain; they allow for flexible plan design and participation; and they don’t require IRS 5500 reporting or government testing, all of which makes them an attractive retirement savings vehicle for small-business owners and their workers. But the appealing simplicity of this type of IRA may become slightly more complicated when it comes to withdrawing from the retirement accounts. 

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    Yale Favors Active Management and Stock Picking

    May 6, 2015 3:40 PM by Lord Abbett Editorial Staff

    Top-ranked endowment prefers firms with “exceptional bottom-up fundamental research capabilities."

    Since the publishing of Pioneering Portfolio Management in 2000, hundreds of colleges have sought to follow in the footsteps of David Swenson, the chief investment officer of Yale University’s endowment. In the book, Swenson laid out the details of a strategy that enabled the university to achieve enviable returns for more than 20 years. The strategy, which became known as the Yale Model, puts a heavy emphasis on alternative investments such as private equity, natural resources, and real estate.

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