June 2016 Newsletter to Clients
Submitted by Moneywatch Advisors on June 7th, 2016Enjoy this month’s edition that features an update on TD Ameritrade tax documents, custodian password security, the economy & stock markets and investment portfolio changes…
Form 5498s: On June 1, TD Ameritrade mailed all impacted clients a form 5498 for tax year 2015. The form reports all individual contributions and rollover contributions to all IRAs (including SEP and SIMPLE IRAs). It also reports employer contributions and rollovers deposited into SEP and SIMPLE IRAs. This form is for your records and is mailed later than most tax forms because contributions are allowed after the end of the calendar year.
Custodian Password Security: Online security of client information is becoming very detailed. A majority of vendors now require 1 to 3 different security measures to access accounts. As we monitor your employer plans, please be aware of password change requests. Once changed, notify us with the new information so we can continue to aggregate your accounts. In some cases it may require us to provide security codes for access. The access codes have time restraints, so we will schedule a phone call in order to expedite the process.
Economy & Stock Market: With the presidential election season moving into high gear the economic and stock market predictors will play second fiddle to the nation’s political pundits. Please keep in mind most of the political analysts know less about investing than you, our average client. Someone tells them what to say to influence the public and much of what will be said is sadly untrue and misleading. The US economy is performing very well as measured by the ever decreasing unemployment rate, now down to 4.7%, close to one-half the previous high reached eight years ago. The only recent negative was the report of low job creation last month.
Short term interest rates will rise soon and we look forward to higher returns from our variable rate (floating rate) investments, BlackRock and Lord Abbett. Ramsey Bova reports from a recent meeting with a Lord Abbett representative, the Lord Abbett Floating Rate Fund will likely increase its monthly distribution after the next interest rate hike by the Federal Reserve Bank. We have been waiting a long time for interest rates to translate into higher cash flow from BlackRock Floating Rate funds. Additionally, we are pleased to see the rise in net asset valuations for BlackRock and the resulting stock price rise. One surprising factor is the steep discount between the net asset value and the share price. Historically, the net asset value and the share price were nearly equal in value, whereas the shares are selling between and 8.5% and 7.5% discount to the net asset value.
A recent report on bank loans reminds us they offer attractive income which we know and potential for capital appreciation for which we hope.
Mutual Fund Changes: Your investment selection committee made the decision to switch out of two specialty growth funds in favor of better performers without transaction fees. During your next quarterly review, T. Rowe Price Overseas Fund will replace Harbor International Fund and T. Rowe Price Real Estate Fund will replace CGM Realty Fund.
Thank you for your continuing confidence.
Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.
