Is today’s bull market really what it seems, or is it more like Ferdinand the bull, which preferred sniffing flowers over fighting?

Suppose you found a mutual fund where the portfolio manager knew for sure which 10% of the largest U.S. companies would earn the highest returns over the next five years, over each upcoming five-year period. The ultimate crystal ball … predicting the future of market returns. You’d invest 100% of your money in that fund and hang tight, right? 

Diversification has been called the only free lunch in investing. This idea is based on research showing that diversification, through a combination of assets like stocks and bonds, could reduce volatility without reducing expected return or increase expected return without increasing volatility compared to those individual assets alone.

At the beginning of 2018, we shared our long-term capital markets outlook along with relevant long-term themes we believe are important to frame our expectations. Now that we are in the second half of 2018, it is time to provide a mid-year update as well as insight into how our thoughts are evolving. 

Master Limited Partnerships (MLPs) have been the recipient of many news headlines creating investor angst and questions for future return prospects. Since August 2014, with the downturn in oil, MLPs have largely been under pressure for reasons ranging from distribution cuts to the effects from the Tax Cuts and Jobs Act.

During the month of May, core inflation did something it hadn’t done in six years — it reached 2%. This percentage has become an important barometer for the market because the Federal Reserve (the Fed) has targeted 2% as an optimal level of inflation for the U.S. economy. As inflation meets and has the potential to exceed this important level, investors should take note.

Real assets, beyond their inflation fighting attributes, possess intrinsic benefits for a diversified, successful long-term portfolio.

If you were being honest, would you find investments in your portfolio you are holding because of emotional reasons rather than because they continue to make the most financial sense?

Passive investments continue to gain market share within the construction of investors’ portfolios. The success of passive investing has also attracted investors with passive portfolio construction. It is our view that passive investors overlook key elements of asset allocation, most notably, index methodology. 

Many of our friends and colleagues have asked us why we launched Fi3 Family Office. The answer is simple: We want to meet the evolving needs of our clients.