Friday, July 12, 2013

The new Wall Street Admissions Test (WSAT)

This is not an endorsement - I'm posting this because I've been receiving inquires about the new Wall Street Admissions Test (WSAT). As I learn more, I'll pass it along. The following was pulled from various online sources.

The Wall Street Admissions Test is your chance to stand out from the pack of finance job seekers. The test is free and it can be taken online.

Many of the most competitive employers will require you to take the test, but taking it also shows initiative to employers for whom it is optional. The WSAT is your chance to show employers your skills and earn an interview.

For every job opening on Wall Street, there can be hundreds of highly qualified candidates vying for the position. Most of the jobs you will apply for will receive thousands of applications from other candidates whose qualifications are very similar to yours. The WSAT lets you stand out to employers. 

Just last year, Goldman Sachs CEO Lloyd Blankfein said that more than 300,000 people applied for available full-time positions at the firm in 2010 and 2011. The bank hired fewer than four percent of those applicants.

The CEO of job search site Monster, Salvatore Iannuzzi, said the average company with 100,000 employees receives about three million applications each year.

On Wall Street especially there are tons of highly qualified candidates with degrees from top schools and stellar GPAs competing for a limited number of openings.

And as Wall Street has contracted due to layoffs, there are more and more qualified people looking for those available jobs. 

So how do you stand out and how does an employer sift through all the job seekers for the perfect candidate? 

That's exactly the problem former investment bankers/ hedge funders Adam Goldstein, 33, and Brett Adcock, 27, are aiming to solve with a new product called Street of Walls— a web site that tests and screens job seekers based on finance industry specific skills employers are looking for. With this service it doesn't matter where you went to school if you can prove your abilities.

Tuesday, July 2, 2013

AIM Fixed Income Fund Performance (as of 6/30/2013)

The holding period for the AIM students in the Class of 2014 began on 4/1/2013 and their first quarter was 5 basis points below the benchmark (Barclays US Aggregate). On a YTD basis the Fund is 4 bps below the benchmark. A further report will be published that provides full risk and return performance statistics.

AIM International Equity Fund Performance (as of 6/30/2013)

The holding period for the AIM students in the Class of 2014 began on 4/1/2013 and their first quarter was 88 basis points below the benchmark (S&P ADR). On a YTD basis the Fund is 242 bps above the benchmark. A further report will be published that provides full risk and return performance statistics.

AIM Equity Fund Performance (as of 6/30/2013)

The holding period for the AIM students in the Class of 2014 began on 4/1/2013 and their first quarter was 53 basis points above the benchmark (Russell 2000). On a YTD basis the Fund is 169 bps above the benchmark. A further report will be published that provides full risk and return performance statistics.

Dan Fuss: "We are in the foothills of a secular rise in interest rates"

As readers of this blog know, Dan Fuss of Loomis Sayles is my favorite fixed income investor of all time. His record is second to none. Here is his recently published quarterly newsletter. Always a good read.

July 2, 2013

Well, the bond market is no longer boring!  The second quarter was not only disappointing but quite volatile.  Year-to-date, the same phrase applies.  Fortunately, on a comparative basis, your account did relatively well.  The accounts' sensitivity to the overall market had been brought down over the last year and a half or so and that turned out to be fortunate.  Nonetheless, the absolute return was disappointing.  A lot more detail will be forthcoming shortly. 

Our forecast, for some time now, is that we are in the foothills of a secular rise in interest rates.  Well, it turned out the first "foothill" was quite something.  From the low of last summer, 10 year Treasury yields have risen approximately 1%.  That may not seem like a lot but going from 1.47 to 2.47 adjusts bonds prices quite a bit.  Thirty year bonds that were issued in the summer of 2012, at par, were quoted at the end of June in the low 80s.  Most of that move actually came in the last six weeks of the second quarter.  So what happened? 

The proximate cause of most of the price drop was a statement followed by clarification from the Fed.  You have read about that.  That was quickly followed by a number of speeches from individual members trying to clarify what they meant.  Nonetheless, the outflows from the mutual funds and selling of the ETFs really picked up momentum.  What helped the market really crescendo on the down side was apparent selling of shorter Treasuries by foreign central banks (an inference drawn from the record drop in Fed Foreign Holdings) and the secondary impact from a liquidity squeeze in the Chinese Market.  Some observers call it the "perfect storm" and I agree with that.  Further amplification came from heavy selling in high quality short-term corporates, a normal secondary reserve for mutual funds and others, that found no bid. 

One change in the bond market is now very apparent.  The "middle of the market", otherwise known as dealers, is now relatively much smaller than the "buy side" and far less able to provide liquidity to the market.  The dealer capacity to provide a thick buffer that dampens the volatility of buying or selling is much reduced.  Thus, volatility increases. 

So what might be coming? 

It does appear to me that the first step in the rise of interest rates turned out to be a much bigger one than would be expected under the circumstances.  Viewed from a more "fundamental" perspective, the global and domestic economies really don't seem to be all that strong.  The Fed has put forth an economic forecast that will help guide their activity.  Based on that forecast, it does not seem likely that they will allow short-term rates to rise for quite a long time, perhaps a couple more years.  The question then becomes what about their buying of intermediate and longer-term Treasuries.  When will they start to "taper"?  That, of course, is up to them.  Nonetheless, when they start and the amount of "tapering" doesn't look likely to be hard on the market for the foreseeable future.  That's the good news. 

The bad news is that fund flows out of mutual funds and ETFs have already started and people are now cautious on fixed income.  The retail end of the market certainly does not look promising.  Partially offsetting this is a quite visible rise in the institutional flows of money to fixed income.  We will just have to see how this plays out.  The institutional flows basically head towards intermediate and long maturities as well as below investment grade in many cases.  The retail outflows seem to be primarily from intermediate and long investment grade corporates, plus from high yield and emerging market funds. 

To sum up:  It looks like the first phase of the first cycle in a secular rise of interest rates is already over.  The market is thinner and so moves like this will come quickly and be sharper.  The recent market disruption has caused some buying opportunities, particularly in the high yield and intermediate investment grade corporate area.  When the second leg starts and from what level is yet to determined.  Our best guess is that yields will be a bit lower before the next rise starts and it's a little bit further out than the market seems to anticipate.  That is yet to be seen.  What does seem apparent is that the market will be more volatile going forward and that can be viewed positively since it will provide periodic buying opportunities.  Thus, our focus continues to be to position your account to take advantage of a longer-term rise in interest rates.  With a lag, the income generation of the portfolio should rise.  The trick will be to keep the capital base steady and rising at the same time.  That is more than a case of “cake and eat it too” but, hopefully, it should be possible.  We'll see. 

Dan Fuss

Loomis Sayles

The CFA Institute launches a new investment certificate program: Claritas

The Claritas Investment Certificate is a new global self-study education program and exam designed to give anyone working in financial services a clear understanding of the investment industry and their professional responsibilities within it. Focused on the essentials of finance, ethics, and investment roles, the program requires approximately 100 hours of study and generally can be completed within six months. 

There is no education or experience requirement; however candidates should feel comfortable with the English language. The multiple choice, computer-based exam can be taken at your convenience at available test centers around the world. 
Successful candidates will be awarded the Claritas Investment Certificate by CFA Institute. The Claritas program promotes a shared understanding of the industry, builds employee confidence, and raises effectiveness across all professional disciplines in the financial services industry, outside of investment roles; from client services to compliance; from human resources to IT and operations; from sales and marketing to legal and administrative services.

To learn more download these Claritas materials: 
Claritas factcard (PDF) 
Claritas booklet (PDF)
Explore the Course of Study

Fast Facts:
·         Online, self-study program, requiring approximately 100 hours of study
·         Two-hour multiple choice exam, available at Pearson VUE test centers worldwide
·         No requirements or experience necessary 
·         Teaches essential concepts and ethics of the investment industry
·         Successful candidates earn a certificate of knowledge