(New York)

With the proliferation of ETFs and model portfolios and the growing amount of assets flowing into them, more and more AUM has been going into low vol and other risk management-oriented strategies. This is doubly true with the big volatility of the last year. However, a small cautionary tale to share today. If you take a look at LVHD, a popular “low volatility high dividend” ETF from Legg Mason, you see a fund that has significantly underperformed the S&P 500 and failed to protect investors from volatility. It is hard to know exactly why because the fund’s proprietary methodology is not transparent. However, even that fact is representative of the space. In their rush to defend against downside, many low vol ETFs and models can inadvertently and drastically underperform and expose investors to very low risk-return profiles.

FINSUM: What you get is not always what is being sold, so when choosing low vol products, make sure to pay significant attention to methodology and track record, especially during periods of volatility.

(New York)

Eyes and ears have been on the Fed as the bond market still is unsure of the future of Inflation, but it was…see the full story on our partner Magnifi’s site

(New York)

Farming, often considered one of the original green industries, has fallen out of sync with…see the full story on our partner Magnifi’s site

(New York)

For years robotics was pigeonholed into major US manufacturing duties but new technology and artificial intelligence are turning that around…see the full story on our partner Magnifi’s site

(New York)

It is pretty easy to sum up what seems like it will be a forthcoming bull market in high yield bonds: “2021 will be the year of the upgrade”. That quote comes from Matt Brill, head of North America investment-grade at Invesco. Ratings agencies are reportedly on the cusp of upgrading between $100 bn and $300 bn of junk bonds to investment grade this year and next. Fund managers are trying to buy the bonds they think will be upgraded as such a move will cause a lot of arbitrary buying by index trackers.

FINSUM: There were huge downgrades last year as the pandemic wiped out prices in big parts of the sector. Now, with the economy resurgent, big upgrades look likely, which should give the whole asset class wings.