John Wasik

Finding a soft landing when bond prices fall

Jun 30, 2014 16:45 UTC

CHICAGO, June 30 (Reuters) – Contemplating the end of a
30-year bull run in bond prices is a bit like waiting to go to
the dentist for some long-needed procedure. You know it needs to
happen, but you procrastinate.

The end of the bond rally has been telegraphed for more than
a year, so it needn’t be painful if you prepare for it now.

Some of the conventional wisdom on avoiding all bonds except
for short-maturity issues may be flawed. There are alternatives
that can make sense while producing modest yield.

If you want to sacrifice yield now for protection later,
consider a floating-rate bond fund that invests in securities
with variable interest rates. Here are two funds to think about:

* The SPDR Barclays Capital Investment Grade Floating Rate
ETF, for example, has little risk of losing money when
rates rise. It gained nearly 1 percent last year as the Barclays
U.S. Aggregate Bond Total Return Index – a benchmark for the
lion’s share of the U.S. bond market – lost 0.2 percent. It
charges 0.15 percent for annual management expenses.

Energy scare good for oil stocks in the short term

Jun 23, 2014 17:10 UTC

CHICAGO (Reuters) – Despite the incendiary conflict in Iraq that last week sent the benchmark price of Brent crude oil to more than $115 a barrel, a nine-month high, U.S. stock markets largely shrugged off the oil threat, hitting record closing highs last week.

For investors, a new energy crisis in the Middle East presents something of an opportunity, albeit a fragile, short-term one.

Energy production has become much more geographically diverse, particularly in the United States. That lessens the severity of a Mideast production shortfall while boosting the long-term prospects of investment in fossil-fuel companies.

The score on Brazil as a long-term investment

Jun 16, 2014 15:07 UTC

CHICAGO (Reuters) – The beginning rounds of the World Cup have offered thrills to global soccer fans. But what should excite investors about Brazil?

The South American country is brimming with natural resources and growth possibilities. Despite concerns about its growth slowdown and its preparations for the upcoming Olympics, the country can be a good holding if global population growth remains on course.

There are more than a dozen exchange-traded funds (ETFs) that hold Brazilian stocks exclusively. They vary from broad-based index funds to specialized ETFs that use leverage to amplify market moves.

Finding wiser choices in smart beta funds

Jun 9, 2014 16:41 UTC

CHICAGO, June 9 (Reuters) – Ever since the dot-com crash
more than a decade ago, Wall Street and the mutual fund industry
have been on a relentless push to plug “smart” beta funds, also
known as “alternative” or “strategic beta” products. The funds
promise reasonable returns with lower risk by focusing on older,
steadier companies with consistent dividends.

But pursuing a smart-beta strategy isn’t as simple as just
buying a fund with that name and thinking it will outperform
conventional index funds. There’s always a trade-off in costs,
risk and return, so you need to dig much deeper to get beyond
simplistic marketing pitches.

For example, let’s say you were seeking an alternative
strategy and were sour on the 150 or so S&P 500 index funds on
the market that weight their stock holdings by the popularity or
market valuation of the stocks within the index.

What’s the best basket for global stocks?

Jun 2, 2014 15:49 UTC

CHICAGO (Reuters) – A stimulative monetary program in Europe and the U.S., combined with continued growth in Asia, are proving to be a potent trio for global investors.

But you have to be selective with mutual- and exchange-traded funds to ensure you have a broad basket for capturing global returns.

If you already have funds that represent the bulk of the U.S. stock market, you don’t need to duplicate those companies in a global portfolio. Funds that stipulate “ex-U.S.” – that is, they exclude U.S. stocks – can ensure you’re well positioned outside of America.