“I selected the Target Date Funds to reduce my fiduciary liability. Are you telling me this actually raises my fiduciary liability?” The panel merely looked at each other and laughed.
Due Diligence
FiduciaryNews asked several prominent independent investment advisers what they felt about the joint agency RFI. They revealed six major concerns every 401k fiduciary must consider regarding annuities.
Sometimes something that appears too good to be true really is. Professionals have long known the potential pitfalls of ETFs. Only recently have these facts become more widely known. Don’t be surprised if, like a tube of toothpaste, squeezing one problem away only creates a bulge in a different problem.
2009 exposed a much deeper problem with Target Date Funds. Pitched as the be-all-and-end-all to 401k investors, these funds fell flat on their collective face as 2008’s down market exposed them as more sizzle than steak. Washington might help, but a knee-jerk reaction to 2008 is not a good solution at all.
With the decline of Modern Portfolio Theory as the default operative model, sophisticated investors seek the Holy Grail – the theoretical basis for determining when active will beat passive and when passive will be active. Has it now been found?
Awful returns suggest investors should have shunned equities during the century’s first decade. Or do they? A closer examination reveals a surprising conclusion, one that might upset the fastest growing segment of the financial industry.
Want to know when Active Beats Passive? A Journal of Investing study may just have the answer.
Job recoveries from financial crises are traditionally slow. Poor credit markets and government policies continue to hamper small business and consumer spending, calling into question whether we’re about to emerge from recession. Worse, once we do, bond investors might be in for an unpleasant surprise.
If you’re a fiduciary worried about potential liability, be warned. Commodities trading remains speculative and may not be appropriate for unsophisticated investors – no matter what the TV tells them.
The wildness of the equity markets and the uncertainty of our economic environment appears to be opening the eyes of the typical fiduciary to more exotic investments. The practical implication may mean greater potential liability.