Eq: Total Market

Put it this way: research analysts and model portfolios don’t go hand in hand. Meaning, of course, an analyst can’t provide model services, according to cskruti.com. Nope. None. Nada.

"I have been asked this multiple times by the advisers and my answer has always been “NO!”

In other words: zip.

But why, you might ask. Well, no buy/sell recommendation in a specific security exists, the site continued. While advice on a “portfolio of securities” is covered under Investment Advisers Regulations, that’s not the case under research analyst regulations.

Those existing research analysts dispensing model portfolios must alter the product offering and discontinue offering portfolios. What’s more, when it comes to a specific security where clients can determine the action on a specific security, analysts are able to provide buy/sell recommendations.

Further driving home the point, based on the terms of a settlement order passed by the Securities and Exchange Board of India in May, sebi-registered research analysts are unable to offer either the portfolios or advisory services, according to livemont.com.

It’s expected the settlement will have reverberations on the platform Smallcase. It offers investors curated portfolios and was created by research analysts and investment advisors.


by Thomas Forsha, CFA

A city skyline at night

Description automatically generated with medium confidence

Is now the time to be adding dividend-paying stocks to your portfolio? With interest rates moving higher, and deflationary pressures subsiding, the key drivers of growth outperformance over the past decade appear to be stalling.

What seems to be a longer-term shift may support value and higher quality dividend-paying companies versus speculative growth companies.

The promise of a dividend check provides an additional dose of certainty for investors. According to Ned Davis Research, dividend-paying stocks in the S&P 500® tend to underperform non-payers in the months leading up to the first-rate increase of a tightening cycle, but in the years after the initial increase dividend payers have outperformed on average by a wide margin. While the past decade has been tough for dividend-focused investors, the best performance for dividend payers has historically been the period that followed the first fed funds rate increase. 

Source: Ned Davis Research, Inc. See NDR Disclaimer at www.ndr/copyright.html.

For vendor disclaimers refer to www. ndr.com/vendorinfo/

With interest rates marching higher and the yield curve steepening, Ned Davis Research points toward the potential for the outperformance of value stocks during a rising rate environment. Will the yield curve steepen over the second half of the year as the Federal Reserve is able to successfully manage a soft landing for the economy, or will tightening prompt a recession causing the yield curve to collapse again? Either outcome is likely to prove favorable for the relative performance of value strategies. And historically, the average value stock tends to enjoy higher dividend income than the average growth stock.  

Past performance is not a guarantee of future results.

Diversification does not guarantee a profit or protect against a loss in declining markets.

Investing involves risk including possible loss of principal. There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for a long term, especially during periods of downturns in the market.

The S&P 500 Index is a capitalization-weighted index of 500 stocks. The S&P 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This does not constitute investment advice or an investment recommendation.

This represents the views and opinions of River Road Asset Management. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader theme.

Data is from what we believe to be reliable sources, but it cannot be guaranteed. River Road Asset Management assumes no responsibility for the accuracy of the data provided by outside sources.

Drop in the, um, bucket list? The performance of a number of model portfolios that leverage the bucket strategy recently was put under a microscope by Christine Benz, Morningstar’s director of personal finance, according to smartasset.com. While the year’s been unkind to the portfolios given their bottom line’s have taken a hit, nevertheless, they’ve outperformed the traditional 60/40 portfolio. That, of course, is an asset allocation retirees commonly use. Further, they’ve outpaced the S&P 500. Through the first six months of 2022, it was down – and by a considerable margin.

The strategy’s a way to spread your assets across different groups of investments that will be tapped at various points.

“[T]he Bucket system has delivered by keeping the faucets open,” Benz wrote. “Retirees using a Bucket system can draw upon their cash reserves without having to disrupt their long-term investments, which have likely experienced price declines so far this year.”

So, is the bucket list holding up in light of the difficulties of the year’s market performance? That would be a resound yes, as it does what it was designed to, according to Morningstar.com.

"True, all of my Model Bucket Portfolios have lost money this year -- and my guess is that most retiree bucketers are seeing red ink for the whole of their portfolios, too,” said Benz.  (As of late June, a 60% U.S. equity/40% bond portfolio would be down about 16% for the year to date.)

But the Bucket system has delivered by keeping the faucets open: Retirees using a Bucket system can draw upon their cash reserves without having to disrupt their long-term investments, which have likely experienced price declines so far this year.”

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