For the first half of 2013, the correlation between the S&P 500 and alternative investments has increased—a trait not desired by most advisors. Correlation does not measure degree of movement. Instead it assigns a number between +1.0 and -1.0 to show whether two investments tend to move up and down together.

As of September 2013, the MSCI Frontier Markets Index (141 companies) was valued at $123 billion, a valuation < 1/3 of Apple. Being small can have negative consequences. For example, it has been estimated that it would take > 10 days to liquidate a $100 million position in a frontier market (but just an hour to dispose of a similar position in an emerging market).

Closed-end funds (CEFs) trade on exchanges and almost always trade at a NAV discount or premium. For example, at the end of September 2012, 70% of CEFs traded at premiums; a year later, 89% traded at discounts (67% traded at discounts > 5%). One risk often not considered is the fact may CEFs are leveraged, which can magnify yields, losses, and gains. 

Since the introduction of its first fund (ICA) in 1934, 67% of the mutual funds offered by American Funds have outperformed their respective indexes on a 5-yearing rolling period basis through the end of 2012. Since 2003, 77% of its funds have beaten their indexes on a rolling 5-year basis; the percentage increases to 92% for rolling 10-year periods starting in 2003.

A 2013 survey by Richard Day Research of 648 couples shows that many couples approaching retirement have not reached agreement on a number of key issues.

2013 Survey of Couples Approaching Retirement

The Barclays U.S. Aggregate Bond Index was launched in 1976. Since its 1976 inception, the index’s worst year has been 1994 (-2.92%). Since 1993, the index has had just two negative years, 1994 and 1999 (a loss of ~ 1%). From the beginning of 2013 to the end of August 2013, the index had a total return of -6.8%.

Tactical asset allocation funds allow managers to shift their asset mix; the goal is to exploit the market’s strong periods while avoiding its weaker periods. According to Morningstar, there were > 40 such funds as of September 2013. The track record of these funds has consistently lagged returns from a balanced portfolio (60% S&P 500 + 40% Barclays Aggregate Bond Index).