Recent healthy returns in retirement portfolios are unlikely to be duplicated in the near future, according to a JPMorgan Asset Management study. In this light, retirement-plan savers and plan sponsors should take three steps, beginning with setting aside more.
The typical retirement saver today is on track to have 80% of the funds needed for a secure retirement, according to Fidelity Investments. This positive outlook is reinforced by a University of Michigan retirement comfort index reading of 109, the highest since 2001.
A Deutsche Bank survey found that 50% of respondents investing in hedge funds plan to raise their allocation this year, compared with 37% who said the same in 2017, with those with pension funds particularly keen to invest more. The survey also shows hedge funds' average management fees have dropped to 1.56% from 1.59% in 2017.
The number of hedge funds focused on cryptocurrencies has increased by more than double in the four months ending Feb. 15 to reach a record 226, according to data from Autonomous NEXT. The increase has occurred amid volatility in the cryptocurrency sector, with bitcoin plunging from nearly $20,000 in December to $6,000 last month and now standing at about $10,000.
Hedge fund fees are falling on average, but managers who can demonstrate outstanding performance might be in a position to raise what they charge, according to BRI Partners research set to be published in the months ahead. "If volatility returns, as we saw last week, then hedge funds that can meaningfully outperform in a down market will be able to justify higher fees," says Stephen Scott of BRI Partners.
Hedge funds' long positions on stocks in the shipping sector increased significantly throughout 2017, according to Securities and Exchange Commission data analyzed by Symmetric. "Shipping has been in a terrible trough for a number of years," but hedge funds are beginning to see an opportunity in the sector, said Chris Walvoord of Aon Hewitt.
The European Systemic Risk Board says that mismatches between investment funds' liquidity and their redemption profiles could cause a spate of destabilizing sell-offs when volatility occurs and that leverage could worsen such a scenario. The ESRB is calling for the European Securities and Markets Authority and the European Commission to introduce "[a]dditional liquidity management tools, further supervisory requirements and tighter liquidity stress-testing practices."
Fee-based indexed annuities offer significantly higher upside potential than commission-based products and are therefore certain to receive broad acceptance from consumers, according to Joe Maringer, national sales vice president at Great American. "We are currently seeing one-year returns that exceed 17%," he writes.
The action by Massachusetts charging Scottrade with violating part of the Labor Department's fiduciary rule is without merit and demonstrates the importance of vacating the rule, lawyer Eugene Scalia told the US Court of Appeals for the 5th Circuit on Friday. The state's action "confirms Appellants' concern that the portions of the rule that took effect on June 9, 2017 will continue to impose extensive burdens and costs on Appellants' members, even while other aspects of the Rule have been postponed," Scalia wrote.
Though indexed annuities sound like they have a lot in common with index mutual funds, advisors should help clients understand that the way indexed annuities work is a lot closer to a fixed-income product, industry experts say. Indexed annuities can provide a good alternative to bonds for income-seeking consumers worried about interest-rate risk, notes one expert.
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