Journal of Wealth Management最新文献

{"title":"Did Fund Managers Deliver Value During the Financial Crisis?","authors":"Feng Dong, John A. Doukas","doi":"10.3905/jwm.2020.1.098","DOIUrl":"https://doi.org/10.3905/jwm.2020.1.098","url":null,"abstract":"This study provides evidence that individual investors are better off by investing through mutual funds run by skilled fund managers, who not only deliver higher risk-adjusted returns in normal times but also attain similar performance even during turbulent economic states, such as the 2007–2009 global financial crisis. Specifically, we show that, on average, fund managers with the highest skill (top 20%) added $6.877 million of value annually during the early crisis period and $4.065 million of value during the late crisis period, compared with $3.198 million gain realized during the entire sample period. Low-skill fund managers (bottom 20%), however, lost $0.844 million of value during the early crisis period and $5.323 million of value during the late crisis period. TOPICS: Performance measurement, manager selection, wealth management Key Findings • Active managed mutual funds with skilled managers can serve an important insurance and value generating function not only during normal times but also in extreme economic downturns. • Funds run by skilled managers experienced significant capital inflows during both the early and late stages of the financial crisis, whereas their low skilled counterparts incurred significant capital outflows. • Fund management skill persists at least 1 year during the whole financial crisis period.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"23 1","pages":"47 - 59"},"PeriodicalIF":0.0,"publicationDate":"2020-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48945248","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Do as I Say, Not as I Do: An Analysis of Portfolio Development Recommendations Made by Financial Advisors","authors":"John E. Grable, Amy Hubble, M. Kruger","doi":"10.3905/jwm.2019.1.089","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.089","url":null,"abstract":"A survey of over 200 financial professionals was used to determine how financial advisors assess, rank, and use client characteristics and risk-profiling inputs when developing asset allocation recommendations. Findings from this study suggest that in a scenario-free context, financial advisors rank a client’s time horizon as the most important risk-profiling input. However, when viewed in the context of a specific client scenario, financial advisors appear to alter the importance of certain risk-profiling inputs, becoming overly reliant upon a client’s age and employment status. Results from this study also show that financial advisors are somewhat inconsistent in their use of risk-profiling inputs across client scenarios. Results do show that older financial advisors with more experience are more apt to consistently recommend portfolios with higher equity ratios than their younger counterparts. TOPICS: Portfolio construction, risk management, wealth management Key Findings • In a client-neutral context, financial advisors rank time horizon, liquidity need, risk capacity, risk need, and risk tolerance as important risk-profiling inputs. • However, when faced with client asset allocation choices, financial advisors appear to use other risk-profiling inputs to shape portfolio recommendations. • Although not a recommended practice, financial advisors seem to be overly reliant on the use of client age and employment status when developing asset allocation recommendations.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"62 - 73"},"PeriodicalIF":0.0,"publicationDate":"2020-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44457520","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Do Health Care Mutual Funds Provide Healthy Risk-Adjusted Returns?","authors":"Srinidhi Kanuri, D. Malhotra","doi":"10.3905/jwm.2019.1.090","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.090","url":null,"abstract":"Specialty mutual funds, such as health care funds, offer an investor the opportunity to focus on high total return, income, and further diversification within a specific industry. Although extensive research has been conducted on mutual fund performance as well as other specialty mutual fund performance, little research has focused on the performance of health care mutual funds. This article seeks to decode the characteristics of health care mutual funds and their performance by examining their risk-adjusted rate of return from 2001 to 2018. The authors find that, on average, equally weighted portfolios of health care mutual funds did not perform better relative to Dow Jones Health Care Index. Net four-factor alphas of health care mutual funds were positive but insignificant. In addition, based on the two performance models studied, these categories of funds have not consistently created positive net alphas for their investors over longer time periods, such as measured the 2001–2018 period. TOPICS: Mutual fund performance, wealth management Key Findings • Specialty mutual funds, such as health care, offer an investor the opportunity to focus on high total return, income, and further diversification within a specific industry. • We found that, on average, on the basis of risk-adjusted returns, equally weighted portfolios of health care mutual funds did not perform better relative to Dow Jones Health Care Index, but they did outperform Dow Jones Total Market and CRSP Value weighted index. • In addition our results indicated that, based on the four-factor alpha model used in our study, health care mutual funds did not have significantly positive net alphas for their investors over the period of this study (January 2001–December 2018).","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"103 - 90"},"PeriodicalIF":0.0,"publicationDate":"2020-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41762264","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Lot Layering: The New Frontier for Hedge Fund Partnership Allocations","authors":"Nathan Sosner, Philip Balzafiore","doi":"10.3905/jwm.2019.1.097","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.097","url":null,"abstract":"Lot layering may help hedge funds improve the alignment between tax outcomes and the economic experience of their investors. Although lot layering is considered by most tax experts to be the most precise method of partnership allocations, this commonly understood precision is reduced upon redemptions due to the cumbersome and uneconomic basis adjustment method stipulated by Treasury regulations. We propose that changes be made to the current regulations that could remedy this problem. Despite its unavoidable deficiency caused by the basis adjustment requirements under the current regulations, we believe that lot layering aligns tax and economics more closely than do any of the aggregation methods presently used by most hedge funds. TOPICS: Wealth management, legal/regulatory/public policy Key Findings • Lot layering is considered by most tax experts to be the most precise method of partnership allocations, where the precision relates to the alignment between tax and economic outcomes of partners in a partnership. • We explain how this commonly understood precision is reduced upon redemptions due to the cumbersome and uneconomic basis adjustment method stipulated by Treasury regulations and propose changes to the current regulations that could remedy this problem. • Despite its unavoidable deficiency caused by the basis adjustment requirements under the current regulations, lot layering both eliminates the need for stuffing allocations and aligns tax and economics more closely than do any of the aggregation methods presently used by most hedge funds.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"23 1","pages":"22 - 31"},"PeriodicalIF":0.0,"publicationDate":"2020-01-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43992993","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Medicare and Tax Planning for Higher-Income Households","authors":"William R Reichenstein, W. Meyer","doi":"10.3905/jwm.2019.1.087","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.087","url":null,"abstract":"This article explains how Medicare Part B and D premiums vary with a household’s modified adjusted gross income. Each time MAGI increases by $1 above several income threshold levels, a couple’s Medicare premiums two years hence can rise by more than $2,400. These premium hikes represent spikes in the marginal tax rate exceeding 240,000%. It then explains how certain life-changing events can affect a household’s level of Medicare premiums. Next, it presents two cases that illustrate the value that financial advisors can add to clients’ portfolios by helping them coordinate a smart Social Security claiming strategy with a tax-efficient withdrawal strategy. These cases demonstrate that higher-income households should consider making Roth conversions from 2019 through 2025, when tax rates are scheduled to be temporarily lower, and before required minimum distributions begin. These Roth conversions may allow these households to greatly reduce the size of both their lifetime income taxes and their lifetime Medicare premiums. Finally, it explains the advantages for households with someone at least age 70.5 of making charitable contributions through qualified charitable distributions from individual retirement accounts. TOPICS: Wealth management, retirement Key Findings • As a household’s income increases, it can cause spikes in Medicare premiums due two years hence. These spikes in Medicare premiums are effectively spikes in marginal tax rates. • Higher-income households younger than 70.5 should consider Roth conversions before tax rates are scheduled to increase in 2026 to reduce both their lifetime income taxes and their lifetime Medicare premiums. • Making a qualified charitable distribution from an IRA is a more tax-efficient method of donating funds, especially for higher-income households.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"28 - 40"},"PeriodicalIF":0.0,"publicationDate":"2019-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49262700","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Impact of Macroeconomic Determinants on the S&P Energy, S&P Industrial, S&P IPO, and S&P Telecom Indexes of the BSE","authors":"Aakruthi A. Alarnkar","doi":"10.3905/jwm.2019.1.086","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.086","url":null,"abstract":"This article examines the effect of macroeconomic determinants on the sectorial indexes of the Bombay Stock Exchange. It considers five macroeconomic variables (exchange rate, inflation rate, interest rate, money supply, and net foreign institutional investors [FII]) and four sectorial indexes of the Bombay Stock exchange (S&P BSE Energy, S&P BSE Industrials, S&P BSE IPO, S&P BSE Telecom). TOPICS: Emerging markets, exchanges/markets/clearinghouses, wealth management Key Findings • Macroeconomic variables have a significant impact on stock returns. Inflation rate and money supply have an impact on all 4 indexes under study, whereas exchange rate has a significant impact on stock returns of all the indexes except S&P BSE Telecom. NET FII and interest rate do not have a significant impact on all indexes, except S&P BSE Industrial Index and S&P BSE Telecom, respectively. • There exists a long-term relationship between the macroeconomic variables and the selected index, but not all macroeconomic variables affect the stock performance in the short run. • From the analysis, it is evident that the macroeconomic variables contain information that can be used to predict the stock returns. Thus, they can be used in forecasting stock market volatility and help investors to make informed decisions and hedge their risk effectively.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"103 - 114"},"PeriodicalIF":0.0,"publicationDate":"2019-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49663466","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Attributes and Implications of Mutual Fund Revenue Sharing and “Defensive” 12b-1 Fees","authors":"John A. Haslem","doi":"10.3905/JWM.2019.1.085","DOIUrl":"https://doi.org/10.3905/JWM.2019.1.085","url":null,"abstract":"Revenue sharing rewards brokers for high and higher sales and/or asset holdings of fund shares, and further defrays current and higher broker costs of advertising and promotion, ongoing broker servicing of fund investor accounts, and educational support. It results in higher broker sales and increases fund assets under management (higher inflows) and profits; higher broker sales of fund shares increases sales concessions and distribution fees. Higher assets under management in turn increase trade size and broker commissions, trade execution, and profits. Revenue sharing usually brings direct payments from fund advisor “profits,” but may be bundled in fund management fees paid to advisors who write the checks. The use of management fees to pay revenue sharing increases fund fee size and fund outflows. Brokers rebate “fall-out benefits” from “excess” revenue sharing payments directly to fund advisors, which motivates higher revenue sharing payments and higher broker profits. Revenue sharing payments via management fees reduce current fund NAVs and shareholder returns. Most retail investors are unaware of the existence, nature, and costs of revenue sharing payments. Revenue sharing is agency conflicted with shareholder interests and returns. TOPICS: Mutual fund performance, wealth management","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"134 - 139"},"PeriodicalIF":0.0,"publicationDate":"2019-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48652989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Exchange-Traded Funds as an International Diversification Tool for Socially Responsible Investors","authors":"Javier Rodríguez, Herminio Romero","doi":"10.3905/jwm.2019.1.079","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.079","url":null,"abstract":"This study assessed the true international diversification value of socially responsible exchange-traded funds (SRI ETFs) that invest globally, in comparison with their more traditional counterparts. The authors used a two-step process to estimate international diversification value. First, they estimated orthogonal returns, which are the returns of a market free from the influence from other markets; then they used these in a two-factor model to infer the exposure to international markets of SRI ETFs. Overall results showed that SRI ETFs international diversification value was significantly higher than that of conventional ETFs that also invest globally. TOPICS: Analysis of individual factors/risk premia, exchange-traded funds and applications, developed markets, performance measurement Key Findings • ETFs are one of the fastest-growing investment vehicles worldwide. • Socially responsible investments are generating interest among investors, especially millennials. • Global SRI ETFs provide better international diversification than traditional ETFs.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"102 - 98"},"PeriodicalIF":0.0,"publicationDate":"2019-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43045144","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Editor’s Letter","authors":"Jean L. P. Brunel","doi":"10.3905/jwm.2019.22.3.001","DOIUrl":"https://doi.org/10.3905/jwm.2019.22.3.001","url":null,"abstract":"In this letter, I would like to revisit a topic we have covered several times in the past: the apparent dichotomy between reality and perceptions, or facts and opinions. I do not mean to focus on the causes of the phenomenon, if only because I am really not qualified to offer anything definitive. Rather, I want to focus on a couple of distortions against which one should develop defenses: wild volatility swings and changing investor behavior. As the last several quarters demonstrated, but even more so as illustrated in the past few months, the oscillation of views between reality and perceptions has the potential to create substantial volatility swings in markets. Volatility is in part a function of the classic discounting process: it increases and decreases as market participants change their views of what to expect in the future. In a world where everyone is focused on more or less the same variables and the same sources of information and insight, the discounting process can be viewed as somewhat predictable if not always smooth. While market adjustments are gradual most of the time, they have at times been quite drastic—and not always the result of a massive and unpredicted change in fundamentals. One of the most frequently quoted investment principles has argued over time that the best investment opportunities tend to be found when there is an extreme of valuation and a fundamental change. This argument usually accepted that one should wait to be rewarded, but presupposed that the wait would be measured in months or occasionally quarters, but certainly not in years or decades. If we go back far enough in time, one major adjustment to the pound sterling exchange rate occurred as a result of a major change in fundamentals: the so-called “return of the sterling balances.” (These were holdings of pound sterling by countries that were formerly members in the “sterling zone.”) Others, just as extreme from a market standpoint, also occurred in part because of a fundamental change; the massive falls in Hong Kong stock prices in the fourth quarter of 1982 is a good example. Hong Kong, then a British colony, would revert to China in 1997. However, the dramatic decline in Japan from late December 1989 onward arguably involved no real fundamental change. Yet, in both these examples, market participants had allowed themselves to disregard fundamental developments and risks that were plain to see if one bothered to look for them. Whether in Hong Kong or in Japan, a US Dollar–based investor would have lost around 75% peak to trough, and, at least in the case of Japan, would still be in the red nearly 30 years later. Admittedly less dramatic events could be mentioned—the Southeast Asian currency debacle of 1997, the Russian ruble meltdown of 1998, the infamous “dot.com bubble” of 2000. They Spiral Bowl 3 Heather root, with pewter inlay and some parts patinated with pigment oil 2012 7.87 inches (20cm) × 7.87 inches (20cm) Photo Credit: Cavin-Morris Gallery","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":" ","pages":"1 - 4"},"PeriodicalIF":0.0,"publicationDate":"2019-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46606210","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Trust within Investment Decisions and Advice","authors":"Petra Ritzer-Angerer","doi":"10.3905/jwm.2019.1.083","DOIUrl":"https://doi.org/10.3905/jwm.2019.1.083","url":null,"abstract":"Behavioral economics can be understood as a paradigm change within economics. The impression of revolution is especially apt in finance, where the participation of individuals has been omitted from the equation for too long. The collapse of Lehman Brothers seriously damaged trust in financial institutions: The stock market crisis became a trust crisis highlighting the significance of trust within investment decisions. Advisors work to create trust for potential investors, while institutions offering this service play an important role within investment decision-making. However, bad decisions ultimately damaged trust in advisors. Here the model of trust intermediaries by Coleman is transferred to investment advisory services. TOPICS: Wealth management, long-term/retirement investing Key Findings • Investment decisions are both emotional and rational (as known from behavioral finance), but there is also an often disregarded relational aspect. • Invest advisory service is more than a specialist consultancy containing only objective facts; it is trust intermediation as modeled by James S. Coleman. • Investment advisors play an important role in the process of trust repair after financial crises.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"22 1","pages":"10 - 20"},"PeriodicalIF":0.0,"publicationDate":"2019-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48797922","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}