| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Richest U.S. Investors Come Back to Big-Cap Stocks in the Hunt for Yield |
Bloomberg - Feb. 23, 2011 - By Elizabeth Ody
Michel Moreno, the 42-year-old chief executive officer of the Moreno Group, an oil-services company, has been investing the cash he set aside during the financial crisis in the most well-known U.S. companies.
“If I’m going to have market exposure, I want to focus on the area I’m personally more comfortable with, which is large- cap stocks,” he said.
Investors like Moreno are buying shares of the biggest U.S. companies again as the market returns to levels not reached since 2008 and the municipal bond market has become more volatile. GenSpring Family Offices, whose average account size is about $30 million, has moved about $1.5 billion, or nearly 10 percent of clients’ assets, into stocks of large dividend-paying companies during the past three months.
“Wealthier folks are beginning to look at this as a market that they can be opportunistic buyers in,” said George Walper, Jr., president of Chicago-based Spectrem Group, a consulting firm that tracks attitudes among millionaires. “They’re still much more cautious than they were in 2005 and 2006, but it’s starting to turn around,” he said.
More than half of investors with $5 million to $25 million in investable assets said they will probably buy stocks in 2011, according to a Feb. 22 survey by Spectrem.
Investors put $5.2 billion into mutual funds that invest in the largest U.S. companies in January, the biggest monthly inflow since April 2009 and a reversal from the $13 billion in outflows in December, according to data from Morningstar Inc. In all of 2010, investors withdrew $77 billion from large company funds, said Morningstar, a Chicago-based research firm.
Overdue for Gains
Shares of U.S. companies such as Coca-Cola Co. and Johnson & Johnson are overdue for gains and represent the most attractive part of the market, according to Jeremy Grantham, chief investment strategist for Boston-based Grantham, Mayo, Van Otterloo & Co., which manages $107 billion on behalf of institutions. Johnson & Johnson returned 4.4 percent and Coca- Cola returned 17 percent in the six months through Feb. 23.
“These stocks are not just a little cheap, they are almost as cheap as they ever get, relative to the rest of the market,” said Grantham, who accurately predicted the 2009 market bottom.
The largest U.S. companies, as measured by the Standard & Poor’s 100 Index, returned 13 percent in 2010 compared with 27 percent returns for small U.S. stocks in the Russell 2000 Index. The S&P 100 had a price-earnings ratio of 14 compared with a ratio of 31 for the Russell 2000 on Feb. 23. Price-earnings ratios represent the price investors pay for each dollar in annual earnings-per-share. A low ratio may indicate a stock is undervalued.
Investing Risks
One risk of investing in large dividend-paying companies is that they could continue to lag behind the stocks of smaller companies and highly leveraged companies, meaning ones with high debt levels, said GMO’s Grantham.
“We don’t expect these quality income equities will keep up with the broad market if we get a market that’s up 20 percent this year,” said Atlanta-based Rex Macey, chief investment officer for Wilmington Trust Corp., the Wilmington, Delaware- based bank that is merging with M&T Bank Corp. Leverage can improve certain performance measures such as return on equity because it allows companies to operate with less equity. Wilmington manages $27 billion on behalf of wealthy families.
Investors have been moving from money-market funds back into mutual funds. On Feb. 16 there was $2.8 trillion in money- market funds, down $83 billion from early December, according to the Investment Company Institute, a mutual fund trade group. Investors put $23 billion into stock mutual funds in January, the biggest monthly inflow since February 2007, Morningstar said.
Bigger Stakes
Bel Air Investment Advisors, which manages Moreno’s investments, has increased clients’ stakes in stocks and other growth investments by 10 percent to 20 percent over the past several months, said Todd Morgan, senior managing director. Los Angeles-based Bel Air clients have $20 million or more in assets and its founders have a combined 57 years of experience with Goldman Sachs Group Inc.
Moreno, who lives in Houston, said he likes the safety and growth potential of companies such as United Parcel Service Inc. that have good balance sheets and predictable dividend streams.
Companies with low debt levels and significant sales in emerging markets, such as 3M Co., offer attractive prospects, said Gary Flam, a portfolio manager for Bel Air, which has $5 billion in assets under management. Shares of 3M returned 13 percent and UPS returned 14 percent over the past six months.
“The strong balance sheets, large cash balances, dividend payouts, multinational revenue streams and relatively cheaper valuations make these ‘blue-chip’ stocks attractive,” said Brent Fykes, senior investment partner for GenSpring, the largest U.S. registered investment adviser, based in Palm Beach Gardens, Florida.
For the complete article.
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