About the Editor
Alex Bryan, CFA, is director of passive strategies for North America at Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. Before assuming his current role in 2016, Bryan spent four years as a manager analyst covering equity strategies. Previously, he was a project manager and senior data analyst in Morningstar's Data department. He joined Morningstar in 2008 as an inside sales consultant for Morningstar Office.

Bryan holds a bachelor's degree in economics and finance from Washington University in St. Louis, where he graduated magna cum laude, and a master's degree in business administration, with high honors, from the University of Chicago Booth School of Business. He also holds the Chartered Financial Analyst® designation. In 2016, Bryan was named a Rising Star at the 23rd Annual Mutual Fund Industry Awards.


Investment Strategy
Morningstar ETFInvestor scans the globe for value and improving fundamentals across virtually all asset classes. Editor Alex Bryan draws upon academic and practitioner research — including Morningstar's sizeable bench of stock, bond and fund analysts — to find reliable drivers of outperformance.

Morningstar ETFInvestor features four model portfolios.

The Basic Portfolio harnesses the market's collective wisdom with ultra-low-cost funds and is the baseline portfolio against which the three other portfolios will be compared.

The Defensive Portfolio aims to provide lower volatility, better downside protection, and better risk-adjusted performance than the basic portfolio over the long-term.

The Factor Portfolio is designed to earn higher returns than the basic portfolio over the long-term.

The Income Portfolio attempts to earn a higher distribution yield than the basic portfolio, without taking a lot more risk.

 
About Editor Editor's Photo
Alex Bryan, CFA,
Director of Passive Strategies for North America and Editor
Alex Bryan, CFA, is director of passive strategies for North America at Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. Before assuming his current role in 2016, Bryan spent four years as a manager analyst covering equity strategies.Previously, he was a project manager and senior data analyst in Morningstar's Data department. He joined Morningstar in 2008 as an inside sales consultant for Morningstar Office.
Featured Posts
Yield Curve Inversion

Earlier this week, the yield curve briefly inverted, with the 10-year treasury yield dipping below the 2-year yield. Such inversions have preceded every recession in the U.S. over the past 50 years by around two years on average. However, it probably isn't worth making big changes to a portfolio based on this news. 

Even if the yield curve is a good predictor that a future recession will happen, it isn't a great predictor of precisely when it will happen. Stocks often continue to march upward between the time the yield curve inverts and the start of a recession. 

But perhaps more importantly, this is not a normal interest rate environment, so an inverted yield curve may be a less useful predictor of recession risk now than it has been in the past. One of the reasons the shape of the yield curve has been a good predictor of recession risk in the past is that it reflects investors' expectations of future short-term rates and investors expect rates to fall during a recession, as the Fed seeks to stimulate the economy. 

The Fed recently cut rates to get ahead of recession risk and signaled a willingness to continue to do so, even though there are signs the economy doesn't really need the boost. Interest rates abroad are also low--in fact, they're negative in the eurozone, which can increase demand for U.S. treasuries and depress rates in the U.S.

While the yield curve is influenced by expectations of future short-term rates, it is also influenced by the term premium, which is the compensation investors require for accepting longer-term bonds higher interest rate risk. That term premium isn’t directly observable, but an econometric model developed by economists at the New York Fed suggests that it has become negative in recent years. This makes it easier for the yield curve to invert even when investors expect short-term interest rates to rise slightly. So, the market may not be pricing in rate cuts after all.

Sam Lee, the former editor of this newsletter, wrote a good blog post about this in April. We’ll tackle interest rates in the October issue.

Best,

Alex 

 

  

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