By Gordon Pape Special to the Star Fri., Nov. 23, 2018 Interest rates are rising. When that happens, bond prices drop. It’s one of the basic rules of investing. But how is that playing out in today’s investment climate? You may be surprised. The Bank of Canada has raised interest rates three times this year, with another quarter-point move possible in December. You would normally expect that such aggressive action would significantly knock down bond prices. However, the FTSE Russell Canadian Universe Bond Index was down only 0.12 per cent year to date as of the Nov. 16 close. In other words, only a tad below break-even. Government bonds took the biggest hit, off 0.22 per cent as a group. Corporate bonds were actually ahead 0.16 per cent. Not big numbers either way. And what about stocks? To that point, the S&P/TSX Composite Index was down 6.5 per cent for 2018. Where would you have rather had your money? Mutual fund returns reflect a similar … [Read more...] about Rates are heading up. Time to buy bonds?
Etfs to buy when interest rates rise
The belief among many is that millennials have Yolo - you only live once - attitudes and cannot be bothered about undertaking tedious things like retirement planning. Well, think again. Manulife Singapore has found that one in two millennials, or Gen Y - those between ages 22 and 37 - has started saving for the future, ahead of other generations like the baby boomers (those born between 1946 and 1964) and Gen X (born after the baby boomers but before the 1980s). But its survey also showed that most millennials are likely to splurge their savings on short-term life goals, such as creating an Instagram-worthy home, over saving for retirement. Mr Tan Kuan Ho, its head of product development, notes that millennials do not like to think about retirement as it reminds them of dying and getting old. "For young millennials, a potential approach would be to talk to them about the concept of financial freedom so that they can go on living their life and pursuing their passion," he says. … [Read more...] about 9 financial planning tips for millennials
source REUTERS/Stringer Markets are falling all over the world, but this should not come as a surprise. From US President Donald Trump’s trade war to Chinese debt, global markets are full of hair-triggers waiting to be pulled. You are to blame also. All that mindless ETF-buying in your retirement account has created an unsustainable momentum boom in stocks. The US Federal Reserve may be making a historic mistake about the bond yield-curve signal. And you’re probably going to be surprised to learn about the $2.5 trillion in risky leveraged loans that corporations are sitting on. Global markets are falling so fast it’s difficult to keep up with the numbers. The Dow Jones industrial average in the US fell 3.2% on Wednesday. In China, the Shanghai Composite was down 5.2% overnight. Virtually all European indexes lost more than 1.5% Thursday. Britain’s blue-chip FTSE 100 lost 1.6% in midday trading … [Read more...] about Why global markets are collapsing right now, and who you should blame for it
NEW YORK: U.S. fund investors are in no rush to shore up defenses against the strong dollar.The greenback's 6 percent leap over the past six months has flummoxed markets from Turkey to Argentina, whose governments have to repay debt in dollars.The stronger currency, which makes U.S. exports more expensive to foreign buyers, has also frustrated President Donald Trump, who is trying to reduce U.S. trade deficits.Yet among the least popular exchange-traded funds (ETFs) this year are "currency hedged" funds, which invest in stocks abroad but strip out the effect of a foreign currency's performance using derivatives. That makes the funds more resilient in a "King Dollar" world, when the greenback is dominant, which hurts U.S. investors converting foreign stock gains back into dollars.Some investors are betting that the dollar's run has gone too far given the risk of seismic U.S. congressional elections in November or the potential for the U.S. Federal Reserve to slow down the pace of … [Read more...] about US stock fund investors show no fear of King Dollar
With fears of a full-scale trade war hovering over investors in the past five months, investing in equities has proven to be quite torturous and unrewarding. This bloodbath was felt all over the world, with emerging markets suffering the brunt of the selloff. USA vs. the world Since the trade war officially began on July 6, the US has trained its sights on China (see It’s Official – Trade War Begins, July 9, 2018). However, in this “US against the world” trade war, the numbers show that only one major stock market seems to be holding up amidst this violent selloff – the US itself. The table below shows the performance of US stock markets versus other countries. The outperformance of the US is very clear. Source: Wealth Securities research Sell EM assets, Buy US assets With the US economy poised to grow four percent in 2Q18 as emerging markets flounder, investors have withdrawn money from emerging markets and plowed it into US assets – stocks, … [Read more...] about Back to the USA