Insurable Interest Canadian Insurance Blog

What You Need to Know Mistimed buying and selling of fund shares drove the lag, a study found. Fund volatility also played a role. The performance gap occurred every year over a decade. Advisors looking to persuade clients to avoid trying to time the market might point them to a new Morningstar report estimating that investors missed about 15% of their funds’ total returns for the decade ended December 2023. Even thoughtful, steady investors can experience a lag between their total returns and fund performance, the research firm noted. Morningstar estimates that the average dollar invested in U.S. mutual funds and exchange-traded funds earned 6.3% a year over that period, underperforming the average fund by 1.1 percentage points per year, assuming an initial lump-sum investment. Fund holdings generated about 7.3% a year, which Morningstar calls the buy-and-hold return. The firm attributed the gap to mistimed buying and selling of mutual fund and ETF shares. “In other words, investors failed to capture around 15% of their funds’ total returns, with that shortfall owing to the timing and magnitude of their purchases and sales,” Morningstar said in its annual “Mind the Gap” report, released last week. “The gap was persistent. We found shortfalls between...

Stocks climbed for an eighth straight day — the longest winning streak in 2024 — with traders hoping the Federal Reserve will signal it’s ready to start cutting interest rates. With the central bank approaching a crucial pivot point, it’s difficult to overstate how much attention financial markets will be paying. For starters, they’re looking for confirmation from Jerome Powell Friday that the Fed will lower rates in September. But more drama surrounds what happens after that and the pace of additional cuts over the next several months as the Fed confronts the dual risks to both inflation and employment. At Bank of America Corp., Ohsung Kwon says the Fed is unlikely to “out-dove” the market, but as long as growth is OK, equities can withstand a less-dovish Fed. “Stocks just need a nod that growth is going to be supported,” Kwon said. “While our view is that risk is to the upside, we do not believe that Jackson Hole will spur the large equity moves that it has in the past when the Fed used it as forum to telegraph upcoming policy decisions.” The S&P 500 extended a rally that’s already added over $3 trillion since the Aug. 5 low. Advanced Micro...

The team, which the bank is continuing to invest in, has 12 specialists in the art market across credit, wealth planning and philanthropy. The bank’s clients that already have loans keep them, while utilization has remained around 70% this year, according to Watson. “The retention and strong utilization is reflected in the balances outstanding, which have remained strong,” he said. Bank of America structures these loans on a variable rate, so over time the cost of capital could decrease if rates fall. The interest rate is based on the secured overnight financing rate, plus a spread, Watson said. So as rates get cut, loans like this are even more likely to increase. Citigroup, which estimates its share of the market at 10% to 15%, has a steady base of art-lending clients because rates on art loans are still favorable compared to other loans, according to Fotini Xydas, head of art finance at Citi Private Bank. “Even though rates are higher, art is a very stable asset over the long term, compared to other assets in terms of volatility,” she said. How Art Loans Work Art loans function as lines of credit, so clients draw on them and pay them back...

In 2022, the index sank 25% before a sustained rebound. And during the global financial crisis, it plunged as much as 57% — and then took four years to fully recover. Above Key Levels The S&P 500’s 200-week moving average has been a strong indicator of the index’s floor since the turn of the century. More recently, the benchmark bounced back after hitting it during the economic growth scare in 2016, the U.S.-China trade war in 2018 and again in 2022. This time around, it came nowhere near that threshold even at its lowest point. While that also indicates how much further the index could slump in a renewed selloff, it shows that investors were confident enough to swoop in well before the market tested a new bottom. Japan Rebounding Japan was at the heart of the global turmoil after its monetary policy tightening sent the yen to one of its strongest levels this year, driving hedge funds to sell off assets to unwind carry trades financed by low-cost loans in Japan. The currency is now easing again because policymakers there were quick to reassure markets that further rate hikes were likely off the table. That’s flowed through to stocks in Japan, too....

A lawsuit accusing a Connecticut investment advisor of making excessive and inappropriate trades for a retired couple has been withdrawn. In a complaint filed in November, Terry and Nancy Chabot alleged that Samir Shehu, managing principal at Shehu Asset Management, an RIA in Southbury, Connecticut, cost the couple more than $800,000 over 18 months by churning their holdings and investing in penny stocks. Terry Chabot died nine days after the suit was filed, Connecticut Superior Court records indicate. The couple’s attorney withdrew the complaint July 26, according to a court filing that didn’t offer an explanation.