Boomer Candy is Bad for Your (Portfolio’s) Health
A recent article appeared in Bloomberg News about the proliferation of target outcome investment products, which are typically sold as structured notes or exchange-traded funds. Target outcome strategies are generally based on equity index performance and offer additional yield or limited downside, along with leveraged but capped upside. Bloomberg reporter and previous Mill Creek Livestream guest, Eric Balchunas, coined the more critical term boomer candy for these products because they seem to strike a chord with investors seeking principal protection and higher yields at retirement.
Target outcome strategies:
- Exploit a behavioral bias known as narrow framing,
- Generally perform worse in absolute and risk-adjusted terms than a simple blend of stocks and cash, and
- Are unlikely to improve portfolio outcomes.
Candy might taste good, but we all know that too much can rot your teeth.
Read our latest white paper from Chief Investment Officer Michael Crook here.
Read why Boomer candy is bad for your (portfolio's) health here.
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