Latest news with #portfolioDiversification
Yahoo
a day ago
- Business
- Yahoo
Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest?
In a recent note to investors, Wells Fargo analysts mentioned that they recommended avoiding emerging market equities right now. Trending Now: Read Next: Since the massive bank holds a weighty opinion, it's worth digging into their suggestion. GOBankingRates unpacks Wells Fargo's recommendation and what that means for your portfolio. Investing in emerging markets allows investors to diversify their portfolio beyond U.S. stocks. While you can target specific emerging markets, like India or Indonesia, opting to purchase an index fund focused on a broad swath of emerging markets can give you some exposure across multiple economies with minimal effort on your part. For example, the MSCI Emerging Markets index offers a popular way for U.S.-based investors to add exposure to emerging markets to their portfolio. In the last year, the MSCI Emerging Market Index saw a net return of 13.04%, which is significantly higher than the S&P 500, which saw a slight decline. While you might think that the outperformance of the MSCI Emerging Market Index over the S&P 500 would warrant investing more heavily in emerging markets, the opposite is true in Wells Fargo's opinion. Since the MSCI Emerging Market Index did so well in the last year, the analysts recognize that many investors who had invested in emerging markets will have seen their portfolio's composition change over the last year, with perhaps more weight in emerging markets than they would like. Explore More: The possible portfolio imbalance, with too much money invested in emerging markets and not enough in U.S. stocks, could represent a problem for some investors. Additionally, Wells Fargo remains unconvinced it's a good idea to stay so heavily weighted in favor of emerging markets. The note pointed to the structural risks of emerging markets, including 'political and economic instability, corporate governance concerns, variable regulatory risks, as well as China's excessive debt, slumping property sector, and slowing growth.' All of this to say, Wells Fargo's note encouraged investors to rebalance their portfolios more heavily toward U.S. stocks instead of emerging markets. In the statement, Wells Fargo said, 'we favor reallocating to U.S. Large Cap, U.S. Mid Cap, or Developed Market (DM) ex-U.S. Equities to maintain overall equity exposure.' Investors heavily weighted toward emerging markets might sell off some of those investments in order to purchase U.S. stocks. For example, you might sell some of your stake in the MSCI Emerging Markets index in order to buy more in a fund tied to the S&P 500. If building and managing your own investment portfolio, the right strategy varies based on your interests, skill level and time commitment. For investors with significant time and the patience to monitor the constant turns of the stock market, actively managing it could be a good idea. But if you are looking for a more hands-off approach with a long-term vision in mind, consider buying and holding low-cost index funds. As you buy and hold index funds for the long term, you can make big-picture changes to your portfolio, like adjusting toward or away from emerging markets occasionally. But, in general, you'll allow the investments to hopefully grow in value over the long term. Wells Fargo is suggesting that investors shift away from emerging markets toward U.S. stocks. For some investors, the shift could make sense. For others, following through on this change wouldn't align with their investment goals. Take the time to decide what's best for your situation before making any changes to your portfolio. More From GOBankingRates 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance (And 2 Reasons They Should) This article originally appeared on Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest?
Yahoo
2 days ago
- Business
- Yahoo
Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest?
In a recent note to investors, Wells Fargo analysts mentioned that they recommended avoiding emerging market equities right now. Trending Now: Read Next: Since the massive bank holds a weighty opinion, it's worth digging into their suggestion. GOBankingRates unpacks Wells Fargo's recommendation and what that means for your portfolio. Investing in emerging markets allows investors to diversify their portfolio beyond U.S. stocks. While you can target specific emerging markets, like India or Indonesia, opting to purchase an index fund focused on a broad swath of emerging markets can give you some exposure across multiple economies with minimal effort on your part. For example, the MSCI Emerging Markets index offers a popular way for U.S.-based investors to add exposure to emerging markets to their portfolio. In the last year, the MSCI Emerging Market Index saw a net return of 13.04%, which is significantly higher than the S&P 500, which saw a slight decline. While you might think that the outperformance of the MSCI Emerging Market Index over the S&P 500 would warrant investing more heavily in emerging markets, the opposite is true in Wells Fargo's opinion. Since the MSCI Emerging Market Index did so well in the last year, the analysts recognize that many investors who had invested in emerging markets will have seen their portfolio's composition change over the last year, with perhaps more weight in emerging markets than they would like. Explore More: The possible portfolio imbalance, with too much money invested in emerging markets and not enough in U.S. stocks, could represent a problem for some investors. Additionally, Wells Fargo remains unconvinced it's a good idea to stay so heavily weighted in favor of emerging markets. The note pointed to the structural risks of emerging markets, including 'political and economic instability, corporate governance concerns, variable regulatory risks, as well as China's excessive debt, slumping property sector, and slowing growth.' All of this to say, Wells Fargo's note encouraged investors to rebalance their portfolios more heavily toward U.S. stocks instead of emerging markets. In the statement, Wells Fargo said, 'we favor reallocating to U.S. Large Cap, U.S. Mid Cap, or Developed Market (DM) ex-U.S. Equities to maintain overall equity exposure.' Investors heavily weighted toward emerging markets might sell off some of those investments in order to purchase U.S. stocks. For example, you might sell some of your stake in the MSCI Emerging Markets index in order to buy more in a fund tied to the S&P 500. If building and managing your own investment portfolio, the right strategy varies based on your interests, skill level and time commitment. For investors with significant time and the patience to monitor the constant turns of the stock market, actively managing it could be a good idea. But if you are looking for a more hands-off approach with a long-term vision in mind, consider buying and holding low-cost index funds. As you buy and hold index funds for the long term, you can make big-picture changes to your portfolio, like adjusting toward or away from emerging markets occasionally. But, in general, you'll allow the investments to hopefully grow in value over the long term. Wells Fargo is suggesting that investors shift away from emerging markets toward U.S. stocks. For some investors, the shift could make sense. For others, following through on this change wouldn't align with their investment goals. Take the time to decide what's best for your situation before making any changes to your portfolio. More From GOBankingRates 10 Cars That Outlast the Average Vehicle This article originally appeared on Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest? Inicia sesión para acceder a tu portafolio
Yahoo
3 days ago
- Business
- Yahoo
Brazier: Stock-Bond Correlation Now 'Much Less Reliable'
Alex Brazier, investment and portfolio solutions global head at BlackRock, discusses portfolio diversification. "The stock-bond correlation now is much less reliable than it used to be," Brazier tells Bloomberg's Francine Lacqua. "Portfolios are shifting both from sort of 60/40 to be more 50/30/20 as you get more private markets and the investable universe expands," he adds. "Within the public market sleeve, people looking much more now at strategies that are market-neutral."
Bloomberg
3 days ago
- Business
- Bloomberg
Brazier: Stock-Bond Correlation Now 'Much Less Reliable'
Alex Brazier, investment and portfolio solutions global head at BlackRock, discusses portfolio diversification. "The stock-bond correlation now is much less reliable than it used to be," Brazier tells Bloomberg's Francine Lacqua. "Portfolios are shifting both from sort of 60/40 to be more 50/30/20 as you get more private markets and the investable universe expands," he adds. "Within the public market sleeve, people looking much more now at strategies that are market-neutral." (Source: Bloomberg)
Forbes
6 days ago
- Business
- Forbes
Beyond The Shine: The Enduring Case For Gold In Your Portfolio
Alex Shahidi, JD, CFA®, CFP®, ChFC®, CIMA®, is a Managing Partner and Co-CIO at Evoke Advisors, and Host of The Insightful Investor Podcast. Gold's impressive performance in recent years has captured headlines, but its true story stretches much further back. Since 1971, when the U.S. came off the gold standard, the precious metal has delivered strong, competitive returns, nearly matching global equities over the long term, with annualized returns of 8.4% compared to 9.2% for global stocks, according to my personal calculations using Bloomberg sourced data. Notably, since the turn of the millennium, gold has significantly outpaced equities, delivering 10.1% annual returns versus just 5.9% for global stocks, by my calculations. This remarkable track record highlights gold's enduring value as an investment, especially in the modern era. Gold As A Portfolio Diversifier Gold's value as a portfolio diversifier is often overlooked. Its average correlation with equities since 1971 has been near zero based on my analysis, meaning gold's returns have often moved independently from stocks. Notably, I found that gold's best decades (the 1970s and 2000s) coincided with the worst decades for equities, and its worst decades (the 1980s and 1990s) aligned with the best decades for equities. According to my estimates, a balanced portfolio of 50% global equities and 50% gold, rebalanced annually, would have outperformed either asset class alone over the past five decades with less risk. My calculations show that during the seven major bear markets for global stocks since 1970 (defined as peak-to-trough declines of at least 20%), gold delivered positive returns in all but one instance, averaging a gain of 17%, with the only exception being a 9% decline in 2022. Gold As An Inflation Hedge Gold is a proven inflation hedge, particularly in environments marked by aggressive money printing and currency debasement. When government debt and fiscal deficits are high, as seen in many major economies today, fiat currencies—including the U.S. dollar—can come under pressure. In such times, gold's role as a store of wealth becomes even more valuable, helping investors protect purchasing power against inflation. Safe Haven In Times Of Crisis Gold often serves as a safe haven asset, providing stability during periods of economic uncertainty, geopolitical stress or major market corrections. This was evident during the global financial crisis (GFC), the Covid-19 pandemic and most recently in 2025, when gold's price rose as investors sought security amid market turmoil. Gold's ability to retain its value and even appreciate during such events underscores its importance as a stabilizing force in investment portfolios. Liquidity And Accessibility Gold is a highly liquid asset that is traded globally and accessible through various investment vehicles such as physical bullion, ETFs and mutual funds. This liquidity makes gold a practical choice for investors seeking both short-term and long-term exposure, and it can be bought or sold quickly in virtually any market environment. The fact that it doesn't produce any income can also make it tax-efficient when held over the long term. Central Bank Activity Central banks have become major players in the gold market, dramatically increasing their holdings from the previous decade. Central banks, particularly in emerging markets, are buying gold to diversify reserves, hedge against inflation and reduce reliance on the U.S. dollar. This sustained central bank demand could potentially provide consistent support for gold prices and could reflect a fundamental shift in global reserve management. Comparison With Cryptocurrencies While both gold and cryptocurrencies are seen as alternatives to fiat currencies, there are fundamental differences. Gold's demand is more diverse and less speculative, and gold has served as a store of wealth for thousands of years across cultures and civilizations. In contrast, cryptocurrencies have a much shorter track record, greater regulatory risk and more concentrated ownership, leading to much higher volatility. As a result, gold is generally considered a more reliable safe haven and stabilizer in portfolios. Risks And Considerations Despite its strengths, gold does have drawbacks. By my calculations, it has historically been about 25% more volatile than stocks, and its price can be unpredictable in the short term. After several years of strong returns, the risk of a near-term correction may be elevated. Gold also does not generate dividends, interest or revenue, making it difficult to value and assess whether it is over- or undervalued at any given time. Additionally, gold remains an unconventional holding for many institutional and high-net-worth investors, who may underestimate its historical returns and diversification benefits. As a result, including gold in a portfolio can set investors apart from their peers and may invite criticism during periods of underperformance. Final Thoughts Gold is more than just a shiny metal. With its surprisingly strong historical returns over the long run, high liquidity and strong central bank support, it can be a valuable portfolio tool that offers diversification, inflation protection and stability during market turmoil. While not a conventional holding for all investors, gold's unique attributes and proven track record make it worth considering as part of a well-diversified investment portfolio. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
