The CFA Institute just held its 2012 fixed income conference in San Francisco.
Speakers shared a very broad range of perspectives on fixed income issues over the course of about a dozen sessions.
Session notes and observations (in no particular order) include:
Demographics and Deleveraging -- Rick Rieder, Blackrock
The Best Idea in Light of Demographic and Fiscal Challenges -- Scott Simon, PIMCO
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The best interests of financial services consumers are much better aligned with a mutual insurance company than a stock insurance company.
Mutual insurance companies are owned by policyholders. Owners of an insurance contract issued by a mutual company are both customers and owners of the insurance company.
Stock-based insurance companies are owned by shareholders, so their focus is divided between customers and shareholders.
Mutual insurance companies are a form of cooperative where individuals voluntarily associate to form an organization that serves the mutual...
Conventional financial wisdom says that bonds should comprise an increasing percentage of a portfolio as the owner ages and heads into retirement.
In theory, a retiree’s need for income and a reduced tolerance for risk are the main drivers of the larger allocation to bonds.
A key consideration, though, is...
Inflation protection for fixed annuities would seem to be a sensible consideration given the fact that central banks around the world are doing everything they can to reflate in the wake of an historic deleveraging.
After all, the worst possible place to be if and when inflation does kick-in is on the receiving end of nominal (not adjusted for inflation) fixed payments, and most fixed annuities fit this description perfectly.
While the inflation protection makes sense in theory, it turns-out that inflation-protected annuities may not be so sensible in practice....
The U.S. longevity insurance market has been developing for almost a decade, and yet there are still...
The concept is seductive: a financial product that provides upside exposure in the event that equity markets trend up and to the right while also providing a floor of protection in case the bottom falls-out from under markets again.
Sort of like having your cake and eating it too. Very tempting in light of the massive financial uncertainty that has existed for the past several years.
Products playing into this “upside plus protection” theme include (but are not limited to) variable annuities with guaranteed...
In his most recent Investment Outlook letter, PIMCO founder Bill Gross suggests that investors need to prepare for difficult adjustments in a world of near zero real returns from financial capital.
Gross describes the dying cult of equity that has evolved over the past century, and advises readers to expect future equity returns that are much less than 6.6 percent average real return (the “Siegel constant”) since 1912.
Gross considers the 6.6 percent real return on stocks since 1912 to be an “historical freak, a mutation likely never to be seen again as far as we mortals are concerned.”
This view is based in part on...
Most...
In a recent Barron’s interview, Ray Dalio discusses financial deleveraging and makes an interesting point about the relationship between nominal interest rates and nominal...
Laurence Kotlikoff is a Professor of Economics and Boston University. Professor Kotlikoff is one of the nation’s leading experts on fiscal policy, national saving and personal finance.
Professor Kotlikoff is the author or co-author of 15 books and he publishes extensively in newspapers, magazines and blogs on issues of personal finance, financial reform, taxes,...
