Where are Affluent Investors Putting Their Cash and Today’s Other Top Stories

February 26th, 2014 by

Hand_holding_cash_light_skyTo get the Best of the Bond Market delivered to your email daily click here.

The current volatility running through stock and bond markets has caused many investors to retreat to the sidelines, opting to hold cash rather than putting their hard earned money on the line.

But hiding out in cash can’t last forever, at some point they’re going to have to commit to the market or watch their savings slowly ebb away due to rising inflation. So where are affluent investors looking to invest once current volatility dies down. Chicago based Spectrum Group which conducts research into the investing habits by high net worth individuals have carried out a survey to find out.

Spectrem’s Millionaire Corner’s monthly survey of investment trends among affluent investors shows that Stock Mutual Funds continue to be affluent investors’ investment vehicle of choice, though this reading dropped 11.88 points to 31.29, basically unchanged from the reading one year ago.

“Not investing” as a response gained 11.32 points to 42.32. This is the biggest month-to-month gain in four months, and just slightly less than the 43.8 reading in February 2013.

Intention to invest in Cash in the coming month dipped 2.99 points in February to 20.18. This is slightly higher than one year ago, when the reading was 18.3 points. While bond mutual funds dropped 4.88 points to 11.88, while Bonds gained 2.55 points to 7.26, a five-month high.

The report further breaks down affluent investment trends and preferences by Millionaire vs Non-Millionaire Households. With millionaires, being more likely to invest than their Non-Millionaire counterparts. “Not invest” among Millionaires did rise 15 points in February to 35.7. Among Non-Millionaires, this reading was 49.3, a gain of 9.5 points.

But the investment vehicle of choice in the coming month for both millionaire and non-millionaire investors, continues to be stock mutual funds, although for millionaires, both categories suffered double-digit drops.

With stock mutual funds dropping by 13.2 points to 36.9, while stocks fell 14.3 points to 29.1. Millionaires, too, indicated a retreat from investments in cash, which dropped 3 points to 23.5, while bonds gained 2.8 points in February to 9.8, a five-month high.

You can read the full report here!

 

Todays Other Top Stories

Municipal Bonds

BondBuyer: – Camp tax reform plan expected to tax some muni bond interest. – House Ways and Means Committee chairman Dave Camp’s tax reform plan would slash the top income tax rate to 25% and impose a 10% surtax on certain earnings of the wealthy, including tax-exempt bond interest that is not currently taxed, according to the Wall Street Journal.

WSJ: – Head muni salesman at Goldman to join hedge fund. – The head of municipal-bond institutional sales at Goldman Sachs & Co. is joining a new hedge fund manager, seeking to take advantage of opportunities in a market that has been rattled by Detroit’s record-setting bankruptcy and fiscal problems in Puerto Rico.

Cate Long: – Puerto Rico’s bond rally and economic contraction. – Political opposition is growing against the waiver of sovereign immunity in the $3 billion general obligation bond offering. Former GDB president and head of economic development Ramon Cantero Frau wrote an OpEd urging the governor not to sign legislation that would authorize the immunity waive.

 

Education

Morningstar: – Understanding risk factors. – The potential for sleepless nights is why investments offer expected returns in excess of cash interest rates, so-called “risk premia.” It really can’t be any other way. High-return, low-risk opportunities attract mountains of capital as fresh meat attracts piranhas, and they’re devoured just as rapidly. The result is a fairly efficient market. For the majority of investors, the only reliable way to obtain higher expected returns is to take on more risk.

 

Treasury Bonds

WSJ: – Treasury bonds rise on economic worries. –  Treasury bond prices rose Tuesday as concerns over the world’s two largest economies boosted the allure of the safe-haven market.

 

Corporate Bonds

IFR: – PepsiCo launches US$2bn two-part bond. – PepsiCo Inc made a huge splash in the US high-grade market on Tuesday, offering US$2bn of three-year and 10-year bonds to an investor base keen on fresh corporate debt.

 

High Yield

Businessweek: – Junk premiums drop to lowest since 2007 in Europe on sales slump. – The premium investors demand to hold high-yield corporate bonds in euros rather than government debt fell to the lowest in more than six years as a dearth of new issues pushes up prices.

 

Emerging Markets

Bloomberg: – Fidelity to Doubleline dodge currencies: Riskless return. – Fidelity Investments’ John Carlson and DoubleLine Capital LP’s Luz Padilla pursue different strategies in their emerging-market debt funds. One thing they have in common is buying bonds denominated in U.S. dollars.

 

Investment Strategy

LearnBonds: – Take some target practice with defined-maturity BulletShares. – Defined maturity ETFs have developed a small but interesting niche within the bond fund universe. True to their name, these funds mature at the end of a specific year, which is typically indicated by the name of the fund. Today, I’d like to take a look at a menu of defined maturity bond ETFs from investment management firm Guggenheim, referred to as their BulletShares.

ETF.com: – Why investors repeat mistakes. – So you learned you weren’t smarter than the stock market, but still think you’re smarter than the bond market?

 

Bond Trading

Reuters: – Banks turn to CDS after electronic platforms flop. –  Wall Street banks, having failed to make any money out of electronic bond-trading platforms, are now focusing on ways to benefit from new regulations enforcing the central clearing of credit default swaps.

 

Bond Funds

Investors.com: – Michael Kors: Why this fund manager likes the stock. – Jim Diedrich and his colleagues at Nuveen Mid Cap Growth Opportunities should send a thank-you note to the Federal Reserve. Amid Fed tapering of its bond-buying program and the prospect of higher interest rates, the market has tilted toward stocks that the $1.3 billion fund favors.

Money News: – Investors flock to bond ETFs at record pace. – Investors are snapping up bond exchange-traded funds (ETFs) at the fastest rate since the investment vehicle was introduced in 2002.

Rick Rieder: – 3 Reasons to stay flexible in your bond portfolio. – The start of 2014 has continued this pattern of volatile activity- rates are actually lower today than they were at the start of the year and the outlook for bonds remains uncertain. So what should investors expect from here? And how can they position their portfolios?

ETF.com: – Shiffer: More fixed-income ETFs needed. – Heather Bell sat down with Jonathan Shiffer, vice president and portfolio manager at Denver-based Curian Capital, to chat about how his firm uses ETFs and what he’d like to see in terms of new launches.

Bloomberg: – ETF Appetite for fixed-income diminishes on reduced money flows. – Exchange-traded funds that buy bonds in the U.S. are losing out to equity ETFs as investors move toward riskier assets, signaling confidence in the strength of the economy.

 

“Bond Squad is my favorite bond investing newsletter. It combines common sense with deep market knowledge.”

- Marc Prosser, Publisher of Learn Bonds

Bond Squad is more than just an investment newsletter! Paying subscribers can call-up bond market veteran trader and portfolio manager, Tom Byrne, for market advice and have him review their portfolio free of charge.

Get a free two-week, no commitment trial of Bond Squad by emailing Tom at thomas.byrne@wsandm.com

Or learn more about Bond Squad’s clearly written, expert analysis, click here

 

Print Friendly
Please Share!