Posts tagged 'Asset allocation'

How much gold should you have in your portfolio?

Since the peak in early September, 2011, the dollar price of gold has plunged more than 40 per cent. Given the human tendency to expect the future to look like the recent past, sentiment seems to have become relentlessly bearish.

Hedge funds have gone net short gold for the first time since data began being collected in 2006.

For the sake of argument, suppose you agree with this “smart money”. (Maybe you were persuaded by this or this.) What should you do?

Knowing the strength of your conviction and your risk tolerance is necessary for determining whether you should simply stop buying more gold than you already hold, go to the other extreme of dumping everything and loading up on ETFs like this, or something in the middle — but it’s not sufficient.

To articulate your view into an actual position you also need a sense of what constitutes “neutral”. In other words, how much gold, if any, would you own in a purely passive savings portfolio? Read more

A late entry in the punny Greek headline comp…

It’s from Michael Hartnett, of BoA Merrill Lynch, but you probably would have guessed that if asked.

My Big, Fat Greek Dreading (and other risks)
To the upside: concerns over Greece prove misplaced, investors over-hedge Fed risks, passage of TPP boost investor & corporate confidence, tech’s creative disruption = higher PE, lower CPI. To the downside: inflation surprises to upside.

Hartnett doesn’t have much to add specifically on Greece, other than this intriguing chart. Read more

Shaken, rotated, positioned

Barclays have had a look at the reaction of various types of investor since markets started to move around with energy in April.

We find that positioning in bonds has been cut back considerably by asset allocation funds, bonds mutual funds and relative value hedge funds. However, hedge funds are overweight equities while equity mutual funds are underweight. In particular, positioning in European equities is once again extremely low. Finally, the surge in USDJPY has coincided with a surge in yen shorts back toward record levels.

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Who really (really, really) wants European stocks?

Along with its cheapness (or not), one of the main arguments about European stock markets appears to be whether investors own as many stocks as they should do. Or more importantly, will they buy more?

Bank of America Merrill Lynch stirred the pot earlier this month with a fund manager survey which found that allocations to European equities had reached highs last seen in May 2007: Read more

Albert and those ‘cheapest for a generation’ equities

Sadly, FT Alphaville’s New York wing couldn’t make it to this year’s Societe Generale-run bear sighting in London — the bank’s Global Strategy conference starring Albert Edwards and Dylan Grice (who’s off to the buyside).

But we did hear that Albert had called European stocks “unambiguously cheap”. It’s a “once in a generation” buying opportunity, and so on. Is Albert, no longer a equities bear!? Read more

What does liquidity mean to YOU?

What matters to an investor when they are choosing assets to invest in? Risk-return is the most obvious trade-off to balance. One can narrow down by asset class and sector, dividing up to achieve diversity (or an illusion thereof).

The memory of the latest crisis still being as fresh as it is, many investors are focused on the liquidity component that sits under the broader category of risk. How fast, and how efficiently, can an asset be cashed in? Read more

Back inside the horrors of the Gaddafi fund [updated]

Another FT story on the swingeing losses incurred by Libya’s sovereign wealth fund under the Gaddafi regime — based on another leak to Global Witness.

Click the image for the full document: Read more

Indonesian equities warning du jour

One of these is not like the others — chart from Nomura fixed income analyst Owen Job, who’s making a point about Asian inflation risk:

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Adventures in equity knife-catching, SWF edition (updated)

If you’re a BP investor who thought twice about catching the falling knife of the firm’s post-Gulf spill shares this summer — well, spare a thought for Norway.

Thanks to the government’s sovereign wealth fund, it’s faced a similar dilemma. Read more

Tick, tock goes the investment clock

This week’s UBS investment research is brought to you by the number eight. (That’s eight, as in eight o’clock, or eight-ish)

You see, the global financial crisis cycle can, according to UBS, most easily be conveyed to investors around the world from the point of view of a clock face…. Read more