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Michelle Gibley at Charles Schwab has identified four common international investing makers that people should avoid.
1. "Confusing a country's economy with its stock market. A growing economy doesn't guarantee a bull market in stocks, nor does a sputtering economy guarantee a bear market."
2. "Not researching what's actually in a country's index. You may not be getting as much diversification as you think when you invest in a country-specific index exchange traded fund (ETF) or mutual fund."
3. "Ignoring currency differences: Currency exposure is part of the diversification benefit of investing internationally."
4. "Substituting U.S. multinationals for international investments. …The stocks of U.S. multinational companies tend to move in tandem with other U.S. stocks, and U.S. multinationals typically still derive a large percentage of their profits from the United States. But this misses the point of investing internationally—to diversify into areas that aren't so highly correlated with the U.S. market."
PIMCO, the world's biggest bond fund, also has an equities fund business. Virginie Maisonneuve, deputy chief investment officer and global head of equities at PIMCO, argues that in the 'new neutral' — a low interest rate and low growth world — investors should look for good stock pickers.
"…Overall, however, the low rate environment will be supportive for stocks provided inflation remains subdued, as companies can take advantage of historically cheap financing," writes Maisonneuve. "While bank lending remains constrained, particularly in Europe, good companies – such as Apple recently – are good examples of how companies are using low rates to tap the market for liquidity. This access to financing is particularly helpful to companies in sectors or activities with attractive demand profiles relative to overall demand in an otherwise slow growth world. This outlook means that investors should look for alpha and stock- picking skills as opposed to equity beta in the years to come. Strong teams with strong processes and proven ability to exploit market inefficiencies are key..."
There's a tendency among investors to get lost in the all the noise surrounding daily market movements. But doing so is going to distract people from their long-term goals, according to BlackRock's Larry Fink. This doesn't mean that investors should park their money in certain assets and forget about them, instead "Imagine your money is like an employee: you want it to work for you," Fink writes. "Are you going to stand over your money’s shoulder, micromanaging and questioning every single thing—and ruining its productivity? Or are you going to put it on a solid path and give it the room to succeed?"
"...So when you think about what to do with your money, don’t think about what’s on the news. Don’t think about what’s important to talking heads or the Twitterati. Think about what’s important to you, and what your goals are. And remember just how long it takes to achieve each of them."
Why Households Should Invest For College Instead Of Relying On A Loan (JP Morgan Funds)
College costs have surged in recent decades. And tuition costs have increased faster (645% cumulative price change since 1983) than any other household expense, according to JP Morgan Funds' Michael Conrath and his team. And these costs are only expected to increase. Conrath and his team point out why households should look to investing rather than relying on a loan for college and they recommend starting early to get the benefit of compound interest.
The largest hedge fund managers in the world, each with over $1 billion in assets under management (AUM) control 90% of industry assets, according to a new report from Prequin reports Simon Jessop at Reuters. These 505 hedge fund managers manage $2.39 trillion in assets. "The increase in hedge fund assets is being driven by allocations from the largest investors in hedge funds, those which currently allocate more than $1 billion to the asset class," according to Amy Bensted, head of hedge funds products.
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