Data & Research November 18, 2011

Engaged, yet On Edge

Charles Schwab clients’ financial sentiments declined in the third quarter, hitting the lowest level in two years.  
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However, the Charles Schwab survey also found that its clients are continuing to engage in the market and remain focused on their long-term investment plans.

Schwab found that investors are optimistic about opportunities in the current market: nearly half (45%) of clients surveyed say now is a good time to invest. Another six in ten (64%) say they would sooner invest a windfall than save it for a rainy day.

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Yet more clients say they feel financially “worse off” (26%) than “better off” (23%) compared to a year ago. And although clients feel equally confident making investment decisions (37%) as they did at the end of the second quarter, their financial discomfort intensified during Q3; 23% now say they feel “better off” financially compared to a year ago, compared 44% who felt that way in June.

“Clients are concerned and uncomfortable with market and economic uncertainties but they aren’t over-reacting,” said Walt Bettinger, Charles Schwab president and chief executive officer. “We’re continuing to encourage investors to talk to us about their goals, timeframes and risk tolerance, which form the foundation of a good investment plan. Confidence and resilience tends to be higher with investors who understand more clearly how their investments fit into an overall plan,” he said. 

In Q3, Schwab clients maintained their cash holdings at close to pre-crisis levels and continued to be net purchasers of securities. The survey reveals that only 19% of clients moved assets into cash in Q3 and even fewer (17%) say they moved to the sidelines in response to recent market volatility.

Bettinger noted that although there are still investors who prefer to work independently, client interest in receiving professional guidance is on the rise. At the end of September, enrollments in advisory solutions stood at a record 2.4 million accounts, up 153,000 from September 2010. For the same period, core net new assets totaled 17.6 billion up 21% from last year, and clients opened 191,000 new brokerage accounts. Client assets totaled $1.58 trillion at month end September.

The Schwab Survey of Investor Confidence was conducted in September 2011 and included more than 1,000 retail clients.  

Products November 18, 2011

Latest Principal Fund Focuses on Low Risk

Principal Funds has launched the Principal Global Multi-Strategy Fund, designed with risk-adverse near-retirees in mind.  
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The Principal Global Multi-Strategy Fund (PMSAX) invests in alternative strategies to achieve long-term capital appreciation with an emphasis on positive total returns and relatively low volatility.

The fund, launched October 24, combines multiple alternative strategies and specialist subadvisers to offer diversification by both strategy and manager. Principal Funds is collaborating with Cliffwater, Inc., a hedged-strategies consultant, to aid in portfolio design, strategy selection and risk management. Additional subadvisors for the fund include:

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  • AQR Capital Management; CNH Partners – multi-strategy
  • PIMCO – multi-strategy (fixed income)
  • Wellington Management – equity long/short (fundamental approach)
  • Los Angeles Capital – equity long/short (quantitative approach)   
  • Loomis Sayles – credit long/short 

Also available from Principal is a new white paper that outlines how alternative strategies may be used to address market risk. The paper takes a current and historical look at equity market volatility and addresses the role of alternative strategies within an asset allocation strategy. It also includes a set of questions for financial professionals and their clients to review when building or evaluating an investment strategy.

The Principal Global Multi-Strategy Fund is the third in a series of funds designed to provide outcome-oriented solutions for financial professionals and their clients. The Principal Global Diversified Income Fund (PGBAX), launched December 15, 2008, focuses on income generation. Launched March 16, 2010, the Principal Diversified Real Asset Fund (PRDAX), seeks to help manage the impact of inflation on purchasing power. For more information on these funds, visit https://www.principalfunds.com/investor/funds/specialty.htm.   

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