Wealth Management Blog | WrapManager (22)

The Case for International Diversification

Posted by Gabriel Burczyk | Founder & CEO

February 14, 2017

The Case for International Diversification

If it feels like the United States has been delivering good (but not gangbusters) economic growth and solid stock market returns since 2009, it’s because it has been – at least relative to some other parts of the world. Europe has continued to struggle with GDP growth and cannot seem to fully shake its sovereign debt issues; Japan has experienced weak growth and lackluster inflation for years; Britain is taking the significant and potentially risky step of leaving the European Union; and Emerging Markets growth has slowed. In a world of political and economic uncertainty, the United States often feels like the best house on the investing block.

For those reasons – and because the US is arguably the largest and most diverse economy in the world – many investors prefer to keep their money close to home. In many ways it makes sense, and for the last few years it has likely been a beneficial strategy. But as Russ Koesterich of Blackrock (the largest money manager in the world¹) smartly points out, “the tendency to invest close to home is understandable, [but] it may not be optimal,” adding that “US outperformance isn’t pre-ordained.”

[+] Read More

Investment Planning

JP Morgan Trade Policy Chess

February 13, 2017

President Trump’s first few weeks in office have been busy on many fronts. However, for investors, his statements on trade policy maybe the most consequential. JP Morgan's Chief Global Strategist Dr. David Kelly, CFA, explains the differences and similarities among a tariff, a value-added tax (VAT) and a cash-flow tax with border adjustments (BAT) and how they might apply to Mexico. He then examines the effects of each for the U.S. economy, consumers and investors. Read the entire market commentary here. [+] Read More

Relationships Strengthen Your Financial Plan

February 8, 2017

If you were asked to give only one answer to the question, “What do you think is the most important quality in a healthy relationship?” what would you say? Our answer: communication. There are, no doubt, other important and necessary qualities in a healthy relationship, like trust, honesty, and commitment to a common goal or end. But it all boils down to the ability to communicate freely and openly. Good communication means being on the same page and working as a team, which in turn makes problem-solving less difficult – and maybe even fun. Think about instances in your workplace or with your spouse/partner where strong communication made everyone happier, more confident, and more productive. There are probably a lot of breakthrough moments that come to mind! Why wouldn’t the same strengths of communication apply to financial planning? Well, they do. [+] Read More

BlackRock: Returns in a Reflationary Environment

February 7, 2017

We have largely maintained our assumptions for equity returns while increasing those for fixed income. Richard Turnill, BlackRock’s Global Chief Investment Strategist, gives us the week in review. Turnhill was previously Chief Investment Strategist for BlackRock’s fixed income and active equity businesses, and has also led the Global Equity investment team. Read an excerpt of his weekly commentary below, or view the entire weekly investment commentary here. [+] Read More

Active vs. Passive Management and What it Means for Your Portfolio

February 1, 2017

There’s been a growing debate surrounding the rise in popularity of “passive investing” as an alternative to active management. Passive investing often refers to the use of ETFs or indexing strategies to mimic a certain benchmark – in short, it essentially allows the investor to simply ‘set and forget’ their investment strategy. Here, we’ll take a look at potential flaws with the passive approach – flaws that many investors may not be considering. But first, it is worthwhile to examine why some investors are reconsidering the value of active management. [+] Read More

Lord Abbett Stocks: Don’t Sweat the Post-Trump

January 31, 2017

Concerns about U.S. equity valuations reflect perceptions that the market has fully priced in prospects for earnings acceleration. But analysts' forecasts for 2017 are nearly unchanged from September 2016. U.S. companies are set to report their strongest profit growth in two years for the fourth quarter of 2016, based on consensus Wall Street analyst estimates. Continuing their recovery from a yearlong decline in quarterly profits, companies in the broad U.S.-market representative S&P 500 Index are expected to report their bottom lines grew by 3.4% in the fourth quarter of 2016, the fastest rate of growth since a 4.6% increase in the fourth quarter of 2014. This quarter’s growth is an improvement from the 3% increase witnessed in the third quarter, and growth is projected to accelerate over the course of 2017. Read on for a summary of their analysis, or view the entire document here. [+] Read More

What's the Difference Between Financial Advisors and Money Managers?

January 25, 2017

Editor’s Note: This post was originally published in December 2015 and updated January 2017. While financial advisors and money managers have many commonalities, and are complementary to one another, the two jobs are very different and are rarely held by one individual. Financial advisors – also referred to as wealth managers, financial planners and investment advisors – understand the specifics of their client’s financial lives and create a detailed, comprehensive investment plan that is best positioned to help you reach your financial goals. Money managers on the other hand spend their time focusing on successfully managing the strategies that your portfolio is invested in. WrapManager's eBook, Guide to Researching Money Managers, discusses this topic in more detail, but we believe your financial advisor and your money managers should be different people. This allows for additional checks and balances that wouldn’t exist if one person performed both jobs. After all, no self-respecting chef would disparage their own food! [+] Read More

Nuveen Weekly Commentary January 2017

January 24, 2017

Investors Await Clarity on Tax and Spending Policies Equity markets were mixed last week, with the S&P 500 Index down fractionally.1 Investors grew more wary about President-elect Trump’s increasing scrutiny of specific corporate policies and a possible push forhigher tariffs. The health care sector suffered due to drug pricing concerns, while retail sectors were hurt by generally disappointing earnings results. Read an excerpt of the complete commentary below, or the entire weekly investment commentary as a PDF. [+] Read More

What to Expect from the Markets Under President Trump

January 19, 2017

On January 20, President-elect Trump will become President Trump. If his campaign rhetoric plays out, we should expect many changes to government and the rules that govern business. Trump has vowed broad-based tax reform, a repeal of executive orders and a roll back of financial, healthcare, and energy regulations (amongst many other things).1 For investors, the election alone does not change the investment landscape – it’s about what happens next. No matter what your political views, it is important to stay attune to policy proposals that surface after the inauguration, and track their progress through the halls of Congress. If that seems like a lot to take-on, don’t worry – WrapManager is here to help! [+] Read More

Robo Advisors vs. Traditional Advisors: Should the Differences Matter to You?

January 17, 2017

Over the past few years, there’s been a technology-related buzz in the financial industry, but it’s not about the latest ‘app’ from Silicon Valley or about Snapchat’s IPO. It’s about a fairly new approach to managing money through “robo-advisors.” These “advisors” are essentially online programs that use computer algorithms – instead of real investment managers and human advice – to make portfolio allocations over time. It sounds futuristic and perhaps promising, but there’s a problem. Robo-advisors generally only perform one function: allocating a portfolio. That may be fine for a new or novice investor that does not have complex financial needs – someone who may only be looking for a diversified portfolio in a cookie cutter format (conservative, aggressive, or somewhere in between). [+] Read More