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Income Report Card | July 2017

Author: Nathan J. Rowader
Date: July 10, 2017
Category: Asset Allocation, Financial Planning
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June was a bit mixed for foreign stocks. Emerging market (EM) stocks led the way with a gain of 1.04% for the month followed by Japanese stocks, which increased by 0.96%. U.S. stocks pulled ahead of Europe this month, posting a gain of 0.62% while European stocks declined by -0.45%. Currency continued to play a vital role in performance as the U.S. dollar declined relative other major currencies. In fact, European stocks did far worse in their local currency, posting a decline of -2.53% in euro terms. Bonds had a wild ride in June with the 10-year Treasury beginning the month at 2.21% and gradually sliding down to 2.14% (a year-to-date low), but jumping back up to 2.31% in the final trading days of the month. The move pushes the yield back into an earlier trading range that, if sustained, may see rates increase as much as 0.30%. For the month of June, global bonds fell 0.09% because of the increase in rates, U.S. high-yield corporate bonds increased 0.14% and EM corporate bonds were flat.

Income Report Card | June 2017

Author: Nathan J. Rowader
Date: June 14, 2017
Category: Asset Allocation, Financial Planning
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May was another positive month for international stocks, which increased by 3.75%, driven by the increasing value of the euro relative the U.S. dollar. In fact, the MSCI Europe Index increased by 4.79% in U.S. dollars, but only 1.65% in euros. Emerging markets (EM) also posted gains, with an increase of 2.97%, although this growth was as bit more organic as currency movement detracted from performance. U.S. stocks increased by 1.41%, bucking the typical “sell in May” mantra. International and EM sovereigns increased by 2.28% and 0.76%, respectively, while U.S. Treasurys increased by 0.83%. Currency also played an important role for international sovereign bonds, as the increase in the value of the euro accounted for nearly 1.50% of the monthly gains. Credit-sensitive sectors gained, but trailed the robust gains in global sovereign markets. U.S. corporate high-yield bonds increased by 1.03% and EM corporate bonds increased by 0.11%.

Income Report Card | May 2017

Author: Nathan J. Rowader
Date: May 8, 2017
Category: Asset Allocation, Financial Planning
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April once again favored foreign stocks over domestic stocks. International stocks increased by 2.61%, outperforming emerging market (EM) stocks, which increased by 2.21%. U.S. stocks managed to finish the month with a positive return of 1.03%. Global bonds increased by 1.13% during the month with foreign bonds outperforming domestic bonds driven by appreciation of foreign currencies against the U.S. dollar, particularly the euro. International and EM sovereign bonds increased by 1.79% and 1.70%, respectively, while U.S. Treasurys increased by 1.70%. Credit-sensitive sectors gained, but trailed the robust gains in global sovereign markets. U.S. high-yield corporate bonds increased by 0.81% and EM corporate bonds increased by 1.48%.

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Income Report Card | April 2017

Author: Nathan J. Rowader
Date: April 7, 2017
Category: Asset Allocation, Financial Planning
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March strongly favored foreign stocks over domestic stocks. International developed stocks increased by 2.8%, slightly outperforming emerging market (EM) stocks, which increased by 2.5%. U.S. stocks managed to finish the month with a slightly positive return of 0.1%. Overall, U.S. markets didn’t favor income-producing stocks, as utilities, U.S. real estate and MLPs all declined during March. Global bonds increased by 0.2% during the month with foreign bonds outperforming domestic bonds. International and emerging market sovereign bonds increased by 0.3% and 0.4%, respectively, while U.S. Treasurys fell -0.1%. Even credit-sensitive sectors such as high-yield corporate bonds fell -0.2%.

Income Investing in an Uncertain World | Part 4

Author: Nathan J. Rowader
Date: March 10, 2017
Category: Alternatives, Financial Planning
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In the third part of this series, we extended our simple ranking system to include risk targeting. This extended analysis produced a portfolio that could deliver higher risk-adjusted returns than a simple ranking system and still deliver a yield in excess of the Bloomberg Barclays Global Aggregate Bond Index. In the final part of this series we will look at the same strategy and examine its sensitivity to changes in interest rates.

Income Investing in an Uncertain World | Part 3

Author: Nathan J. Rowader
Date: March 10, 2017
Category: Alternatives, Financial Planning
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In the second part of this series, we outlined how a simple ranking system, using yield and momentum as ranking data points, can provide current income in excess of Bloomberg Barclays Global Aggregate Bond Index with a level of risk similar to the index. This process solved the problem of excess risk in a simple buy and hold strategy of high current income asset classes. For the most part, an investor could simply stop at the ranking system and likely get what they need to achieve their financial objectives. But can we improve on the simple ranking system? Yes we can!

Income Report Card | March 2017

Author: Nathan J. Rowader
Date: March 8, 2017
Category: Asset Allocation, Financial Planning
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U.S. stocks led global markets in February with the S&P 500 Index increasing by 3.97% and the Russell 2000 Index gaining 1.93%. This disparity could mark the end to a period of very strong relative performance for small-cap stocks versus large-cap stocks, or it could just be a lull in an otherwise strong trend.

Income Report Card | February 2017

Author: Nathan J. Rowader
Date: February 16, 2017
Category: Asset Allocation, Financial Planning
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Emerging market (EM) stocks increased by 5.48% during the month of January, as measured by the MSCI Emerging Markets Index. This gain is a continuation of the strong performance in 2016 and helps bolster the case that the emerging markets may be heading toward a better return cycle relative other markets.


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