Many smaller US defined contribution (DC) plans rely on guidance from advisors, and the majority of these DC plan sponsors are happy they do so. But how do plans gauge whether they really need advisors, and assess the benefits against the cost of advice? (more…)
In 2012, investors worried about the future of the euro, the US fiscal cliff and the emerging-market slowdown…yet stocks still climbed higher. What lessons should we learn from 2012? We’d suggest four key takeaways. (more…)
Many US endowments and foundations (E&Fs) still plan to spend 5% of their assets each year, despite unusually low expected returns. We think few understand how likely it is that this will limit their ability to fulfill their missions in perpetuity. (more…)
When it comes to constructing the perfect defined contribution (DC) plan, sponsors and participants both might benefit by taking a page from the Rolling Stones’ famous line: “You can’t always get what you want, but…you get what you need.” (more…)
In the past few weeks, central banks have reaffirmed their intent to do “whatever it takes,” in European Central Bank (ECB) President Mario Draghi’s words, to address the various ailments afflicting the global economy. While central bank actions may or may not have their desired effects on the real economy, they do create short-term opportunities and medium-term risks for investors, as my colleague Jon Ruff explains below. (more…)
The US Department of Labor’s new 404(a)(5) fee-disclosure rules for defined contribution (DC) plans will provide participants with a lot more information on plan and investment fees—in plain language. That’s a good thing. But there’s a real risk that the new rule may unintentionally drive participants to make poor investment choices. (more…)
Investors fleeing stocks have mostly sought shelter in bonds. That’s understandable, given their relative stability and reliable income. But it’s important to compare long-term expected returns, too.
While some people deem stocks expensive relative to 10-year trailing earnings, we take a forward-looking approach. It starts with the premise that the stock market is not a casino and stock prices are not pulled out of thin air: they reflect the intrinsic value of companies’ future earnings. (more…)
The Wall Street Journal published an article on August 1 headlined: “Bill Gross: Equities are Dead.” In fairness to Gross, what he actually wrote in his August “Investment Outlook” was, “the cult of equities is dying.” We agree with most of Gross’s argument—but not with his unsupported forecast of extremely low stock returns. (more…)
Not in our view. Although we recognize that the US and global economies continue to be scarred by the credit crunch that began in 2008, we think stock prices already discount the risks.