The week that was … the week to come

Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. This week, we’re publishing two days early due to the holiday on Friday, December 25. And with 2020 ending next Thursday, there’s a recap of the biggest stories throughout this entire year.

Active fixed-income management is a low-cost option

Investors have been moving toward low-fee, passive investment solutions over the past two decades. As of the end of September, total assets in passive mutual funds and ETFs were nearly $9 trillion, or nearly 42% of all mutual fund and ETF assets. Investors have poured $220 billion into passive fixed-income strategies in the past 12 months with $69 billion flowing into the passive intermediate core bond category alone. The allure of these solutions is obvious: costs matter. The problem, however, is that passive investors are only considering part of the story when they equate costs with fees. By ignoring opportunity cost considerations, passive investors have set themselves up to pay low fees and potentially receive lower returns, therefore paying higher total costs in the end.

Why the key to portfolio allocation within equities hinges on interest rates (Hint: This will solve your growth vs value debate!)

With growth stocks crushing value stocks over the past few years, we’re often asked, “What will it take for value stocks to outperform?” Two key, but often overlooked, considerations are interest rates and the math behind discounting future cash flows in a net present value (NPV) calculation.

The week that was … the week to come

Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of November 28–December 4, 2020. Plus: Since we started a new month on Tuesday, there’s a quick recap of the big stories from November.