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Fri12152017

Last updateSat, 29 Jul 2017 12am

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Timing not important?

PIMCO launched its Total Return ETF in 2012-03-01.  The ETF has delivered a return of 7.6% doubled its flagship fund performance – PIMCO Total Return fund, a mutual fund, with a return of merely 3%, since its inception in March 1.

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Greece will stay on Euro zone

Increasingly people are ‘believing’ the reality of ‘Grexit’ (Greece exit) the Eurozone.  The good thing is if that sentiment (worst case scenario) were to be factored in the market, we would not experience Lehman Brother II saga, if it were to take place.  However, in my opinion, the greatest challenge of ‘Grexit’ is how Euro would address the contagion of bank runs.  If there is no idea way in managing the contagion risks of bank runs make the ‘Grexit’ questionable.

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When diversification does not work

We have been told of the benefits of diversification – that by diversifying our investment into broad range of assets where their returns were uncorrelated, the overall returns would be enhanced.  It is not the case this year as we are approaching the end of 2008.

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Risks associating with Perpetual Bond

Some called it Perpetual Bond, some called it ‘Hybrid Bonds’ and some named it ‘preference shares’…is hot in Singapore!  In just four month this year, companies have raised S$12 billion or 57% of the S$21 billion raised on the bond market last year.  They are hot because interest rate is low and cash rich people don’t know where to park their monies and as such, they find such investment instrument attractive!  But do watch out!

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It pays to diversify

When it comes to investing, some people prefer 'focus strategy' and they are likely to quote Warren Buffet's sayings, "Wide diversification is only required when investors do not understand what they are doing.". They equate diversification to lower returns.

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