Investment Tips

John Rekenthaler, Vice President of Research for Morningstar discusses how the stock market is not the economy and explains how the two are drifting even further apart.

Investing in a mutual fund may seem daunting and overwhelming at first. Before you get mired in a number of details, you need to decide whether you want some help choosing your funds or whether you would rather do it on your own.

The playbook used to be simple, size and market power mattered, and the strategy was to create value by controlling the value chain. This concept is now broken, and more companies than ever are required to pivot and innovate in a digital world to keep pace with a new generation.

In this article Morningstar take a look at how the coronavirus has affected the market and what to do about it, if anything. Even though the market has partially recovered from the sharp sell-off in late February and March 2020, there is still considerable uncertainty about the economic fallout from the virus.

Slowing growth, de-globalization, and higher savings rates may warrant greater caution and selectivity with respect to emerging markets debt over the next decade.

Some investors use a set-it-and-forget-it approach to their portfolios, but there are times when the asset mix may need to be recalibrated to achieve one’s goals.

In this week’s article we will have a look at the relationship between net asset value (NAV), yield, and total return. There are two main components of total return, Income or yield and capital appreciation, which are two ways how an investor in mutual funds can earn money.

A mutual fund’s price is calculated as its net asset value, or NAV. The NAV for a given mutual fund is the price of its assets (with all of its liabilities subtracted) divided by the number of shares.

When times of turmoil hit, most investors become risk-averse, seeking safety over opportunity for higher returns. The coronavirus-driven crisis is no different in that regard. However, director of fixed income at Franklin Templeton, London, sees some striking differences between this and other crises.

All major ratings agencies adopt a “rate through the cycle” approach. All agencies have also given implicit/explicit credit to euro issuers for being part of the EU and, to a greater or lesser extent, operated in the expectation that the EU will work to help any member state as long as that state tries to help itself.