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Let’s assume that you want an excellent asset allocation, one designed to take on a particular level of risk while providing an expectation that the return will exceed returns generated without that risk. Michaud optimization, applied to a comprehensive global universe of funds providing exposure to multiple risk premia, gives a...

When reporters talk about volatility, recessions, depressions, bubbles, and other fear-inducing financial news and opinions, clients often pull their money from the portfolio that they carefully selected in an urge to protect their assets. However, investors who stick to their long-term plan and rational investments tend to outperform investors who trade reactively. Part of th ...

As you know, US Treasury rates are low by historic standards, but comparing current developed global yields shows that the US treasury rates are not outliers.  The US ten year treasury rate is at 2.5%.  Notably, other ten year rates are lower. The German ten year rate is at 0.99%, the French ten year bond is at 1.35%, and Japan continues their well-documented low with a current ...

New Frontier submitted this comment to the SEC and DOL in response to File No. S7-12-10. The False Promise of Target Date Funds as QDIA Investments The Department of Labor (DOL) should disallow blanket fiduciary relief for target date funds (TDFs) as qualified default investment alternatives (QDIAs). Our recent research (Esch and Michaud, 2014) based on thousands of simulatio ...

At investment conferences around the country, we’ve had the opportunity to answer many of the questions facing advisors today. This blog post highlights examples of questions that help and hinder thinking about investments. Let’s pick on some questions that may be unproductive to ask because they get investors thinking like speculators: for example, what’s the S&P500 (or ten year bonds or Tesla) going to be at by the end of the year?

Many investors are currently afflicted with “market regret” disease. Spooked by the great 2008 meltdown, they cashed out and watched from the sidelines while the market, including a 32% return in 2013, tripled beginning in March 2009. Others may have invested in exotic low risk strategies that often did not meet objectives or even succeed in preserving capital. With indices ne ...

It is an interesting and sometimes contentious policy question how retirement wealth should be managed, especially for relatively uninvolved or uninformed investors. Governments have taken an active role in allowing certain investments for retirement plans, and disallowing others. Plans which require little intervention, but still keep retirement savings safe, are favored for l ...

Interest rates affect your portfolio through all asset classes, but may do so in different ways. Investors are on edge about rising interest rates today, but sensitivity to interest rates has long been a concern of serious investors (along with all other aspects of portfolio risk).  Duration is the standard statistic used to describe the sensitivity of a portfolio to small cha ...

Question: U. S. Equity markets are up. Why isn’t all of my money in the S&P 500? Why do I have any exposure to treasuries when everybody knows they are underperforming U. S. equities? At the heart of New Frontier’s investment policy is planning for all contingencies and reducing portfolio risk. It may be fashionable to bet strongly on particular outcomes, but a sensible lo ...

The universe of investable ETFs has experienced tremendous growth over the over the last 20 years since the launch of the first ETF to over 1,000 investable products.  The vast expansion of choices raises the question: How to choose among so many options?  To vet new ETFs and reconsider ETFs that are currently included in our portfolios, the New Frontier investment committee an ...