Author Topic: Interval Liquidity investment products  (Read 250 times)

talltexan

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Interval Liquidity investment products
« on: May 16, 2018, 08:12:37 AM »
http://www.etf.com/sections/index-investor-corner/swedroe-look-beyond-6040-portfolio?nopaging=1

Larry Swedroe is very skeptical that we can plan on the type of returns we had in 1981-2017 continuing.

Do any of you have any experience with these "periodic liquidity" asset classes?

MustacheAndaHalf

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Re: Interval Liquidity investment products
« Reply #1 on: May 16, 2018, 08:58:53 AM »
That article also has a wake up call that 5% returns are the best estimate of returns in the U.S. market (using 2% inflation).  CAPE 10 isn't a law, but a tendency, so you can't rely on it to time markets.  But preparing for lower returns would be supported by overly high CAPE 10 ratios in U.S. stocks.

While it's good Larry Swedroe explores new investments, things with a longer track record are emphasized more in his books - and are also mentioned in that article.  You can use international diversification to gain a boost, based on CAPE 10 being lower for international stocks (and even moreso for emerging market stocks).

You could even decide if you want the factors he's mentioned the longest (small caps and value stocks) or more recently (momentum, quality, profitability).  The article also mentions that approach for another few percent.

Right now there are international and U.S. funds with factor tilts.  With both of those working in a portfolio, are less liquid investment products needed?

talltexan

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Re: Interval Liquidity investment products
« Reply #2 on: May 17, 2018, 08:49:53 AM »
This is a good point. I have to say that I feel better about factors like Small than I do about these periodic-type liquidity investments, but some of that is just because of having poor experience with P2P lending.