WrapManager's Wealth Management Blog
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Avoiding Slow Failure in Retirement Planning

Posted by Guest Author

May 30, 2018

Editor’s Note: This article was written for the WrapManager Wealth Management blog by guest author Justin Sibears, a Portfolio Manager at Newfound Research. More information about Justin and Newfound can be found at the bottom of the article.

Slow failure in investing happens when portfolio returns are insufficient to generate the growth needed to meet your objectives. No one event causes this type of failure. Rather, it slowly builds over time. Think death by a thousand papercuts or your home slowly being destroyed from the inside by termites.

Traditionally, this type of slow failure was probably the result of taking too little risk. Oversized allocations to cash, which as an asset class has barely kept up with inflation over the last 90 years, are particularly likely to be a culprit in this respect.

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Retirement Planning Newfound Research LLC Saving for Retirement

Presenting WrapManager's Q4 2017 Top International Equity Money Manager Picks Report

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While the United States represents the largest single contributor to global GDP, 75% of the world’s GDP is taking place across our borders in other countries. That means that from an investing standpoint, an international equity strategy can help diversify your portfolio and take advantage of the many investment opportunities available outside of the U.S. Though we have seen that historically there have been market cycles where international equities outperform U.S. equities[1], there can be a tendency for many American investors to have a home bias that favors domestic investment and largely ignores non-U.S. opportunities. [+] Read More

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Congratulations to Newfound Research for winning the 2016 award for Best ETF Strategist with their QuBe portfolios. Editor’s Note: WrapManager does not provide direct investment access to the QuBe portfolios. WrapManager provides investment access to several other Newfound products, including the Risk Managed Sector Series. After the announcement of the winners of the 2016 ETF.com awards WrapManager spoke with Newfound Research about their place in the rankings. Answers were provided by Justin Sibears the Portfolio Manager at Newfound. A frequent speaker on industry panels and contributor to ETF Trends, Justin holds a Master of Science in Computational Finance and a Master of Business Administration from Carnegie Mellon University as a well as a BBA in Mathematics and Finance from the University of Notre Dame. [+] Read More

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Tactical money manager Newfound Research explains why portfolio drawdowns become more damaging as retirement nears and makes the case that baby boomers need a risk managed solution when it comes to investing. “When we think about retirement specifically, many people’s savings are extremely back-loaded. The years leading up to retirement tend to be when a person has the most earning potential and can put the most money to work in their investment portfolio. As a result, drawdowns that occur closer to retirement can be significantly more devastating than drawdowns that occur earlier in a person’s career.” Read Newfound's Full Commentary Here Get Free Research Reports on Newfound Research [+] Read More

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Many investors today are faced with the same problem: how do you generate income in your portfolio when interest rates are so low? In the current market, finding asset classes that generate income at significant enough levels can be difficult: Traditional Income Generators (Click chart for larger version) Source: Newfound Research LLC. Short-Term U.S. Treasuries represented by SHY. Short-Term Corporates represented by CSJ. MBS represented by MBB. Intermediate Term U.S. Treasuries represented by IEF. Total U.S. Bond Market represented by AGG. Long-Term U.S. Treasuries represented by TLT. Intermediate Term Corporates represented by LQD. High Yield Corporates represented by HYG. Yields computed using smoothed trailing 252-day dividends. Starting date for graph is April 2008 because that is first date yields could be computed for all of the ETFs used in the analysis. Newfound Research LLC, a Boston-based tactical money manager focused on risk management, recognizes this problem and has created a distinct solution: The Newfound Risk Managed Income Strategy. The overarching goal of the investment strategy is simple: increase portfolio income in a prudent manner, by investing in traditional equity, fixed income and alternative-income vehicles in a risk-managed framework. In a fully bearish environment, the portfolio has the ability to move entirely to cash. [+] Read More

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