Ventured&Gained; - Personal Finance News and Insight I Bloomberg

To defer or not to defer? That is the question for executives expecting a 2013 bonus.

They have until June 30 to put some of their reward in a deferred compensation plan, if their company offers one. The accounts are a way top managers can save for retirement without paying current income tax on amounts above the annual contribution limits of tax-deferred 401(k) accounts, which in 2013 is $17,500 for people under 50 and $23,000 for those over 50.

Deferring might be an attractive option at the moment, with higher federal tax rates for top earners this year and increased levies in states such as California, said Robert Barbetti, head of executive compensation advisory services for J.P. Morgan Private Bank in New York.

About 76 percent of chief executive officers at Fortune 100 companies had these deferred compensation plans last year, slightly more than in 2011, according to Aaron Boyd, director of governance research at executive-compensation data firm Equilar Inc. Some companies offer the plans to other highly paid executives and managers, said Andrew Liazos, a partner at the law firm McDermott, Will & Emery.

Of all the puzzles facing investors and savers, inflation may be the most perplexing. Economic data suggest prices are rising very, very slowly. The world’s inflation rate is the lowest in more than two years, the OECD said on June 4, and the U.S.’s April inflation rate of 1.1 percent is less than half its already-low rate of a year ago.

Still, we’re anxious about inflation, and we should be, because inflation shrinks our purchasing power and that can push goals out of reach. Consumers surveyed by the University of Michigan worry the inflation rate will nearly triple over the next year.

Popularity often comes with a big price in the mutual fund world. Right about the time most of us become aware of a fund's great performance and invest, its returns start to suffer. Academic studies show that a big influx of assets can make a fund less nimble and lead managers outside their ideal investment universe. It can also have a psychological effect on managers, who can become overly risk averse lest they make a mistake and lose all those assets.

New funds, of course, have a different problem. They’re untested so investors, often wisely, avoid them. The solution to this quandary: Find a new fund run by a very experienced manager.

Remember, back in the Paleolithic age, those “alternative music” bins they had at old record stores? They were always intriguing, but when you put the headphones on you never knew what you were going to get. The mutual funds listed in Morningstar’s Nontraditional Bond fund category are kind of like that. And, as with the record bin, sometimes you find some real gems --- and sometimes you find incomprehensible noise.

Names like Pimco Unconstrained (PFIUX), Eaton Vance Global Macro Absolute Return (EIGMX) and Driehaus Active Income (LCMAX) don’t have the same sex appeal as Nirvana or Smashing Pumpkins. Some of these alt funds have become just as popular in their own way, however. Assets in the group have grown tenfold since the end of 2009 to $80 billion, $12.5 billion of which flooded in this year. That’s despite the fact most of the funds are less than five years old and have strategies that are as challenging to classify as music that gets tossed into "alternative" with a shrug.

If the financial markets were a horror show (and sometimes they are), investors know what would be behind that white hockey mask today. The killer stalking portfolios would be revealed as...rising interest rates.

So far this year, $16.3 billion has gone into fixed-income exchange-traded funds designed to have low sensitivity to interest rates, according to Bloomberg data. That's a 35 percent jump since the end of last year. And while articles like this one come out at least once a month, and there have been false alarms about rising rates, the ETF flows -- which many consider to be the smart money -- show that investors are seriously creeped out.

When the SPDR Gold Trust (GLD) debuted in late 2004, it reached $1 billion in assets faster than any exchange-traded fund in history -- in three days. Assets peaked at $76.7 billion in August 2011, when GLD briefly outranked the biggest of the big, the SPDR S&P 500 ETF (SPY).

GLD has come back down to earth this year. While it's still a huge ETF -- the world's fourth-largest, at $46 billion -- investors have pulled out $16.3 billion as of June 3, according to Bloomberg data. To put that in perspective, for all of 2012 the ETF with the most outflows was the iShares Barclays 1-3 Treasury Bond Fund (SHY), with $3 billion. Investors have yanked more than five times that out of GLD; it's down nearly 16 percent and the year's not half over. GLD still boasts a 202.5 percent return since its inception, nearly triple that of the S&P 500.

Even with unemployment high, plenty of U.S. employers are having trouble filling jobs. The (relatively) good news is that the number of companies unable to find the right employees is down to 39 percent from last year's 49 percent, according to ManpowerGroup.

Nearly half of all employers, unable to attract the right talent, are resorting to other methods to meet their needs -- providing additional training to existing staff, trying to recruit people without formal qualifications and even increasing starting salaries, the company says.

Mark Kohn has built a career out of finding hidden money. The Los Angeles-based forensic accountant usually has a secret weapon that the taxman doesn’t: an estranged wife or husband willing to tell all.

Spouses know when business owners use company funds to buy sports cars, pay for birthday parties or hire children for jobs they never do. Their motive in squealing: To get a fair share in a divorce settlement. Kohn is hired in cases when one spouse is suspected of hiding business income.

It doesn’t seem possible that anything with the acronym BEER could be harmful to investors. But let’s just say they’ve gotten a wee bit tipsy on the current Bond Equity Earnings Yield Ratio. The ratio, known in Wall Street parlance as BEER, compares the current yield on 10-year Treasury bonds to the earnings yield of stocks. The earnings yield is the inverse of the price-earnings ratio. The theory is if stocks are yielding more than bonds -- a BEER ratio of less than one -- then stocks are cheap.

The current earnings yield on stocks is 5.21 percent, significantly less than its 7.47 percent historical average over the last 142 years. Treasury bond yields are so low at 2.15 percent, the BEER ratio of 0.41 makes stocks look cheap in comparison. The ratio has been getting a lot of buzz -- writers at CNBC ("This Bullish Indicator is at a 58-Year High"), the New York Times ("Based on Relative Yields, Stocks Look Cheap"), USA Today and the New York Federal Reserve Bank have cited it in analyses of whether the stock market has room to run.

In the investment world there are two kinds of people -- those who want to beat the market, and those who want to be the market. Hedge fund managers are the former, while index fund managers are the latter. But what happens when an indexer wants to track the hedge fund market? You end up with funds bearing wonky, impenetrable-sounding names like the AdvisorShares QAM Equity Hedge (QEH) and AlphaClone Alternative Alpha (ALFA).

If you can make it past the jargony horror of the fund names and their strategies, they're a pretty interesting bunch. The AdvisorShares QAM ETF, started last August, uses what’s known as a (you were warned) “beta replication” strategy to mimic the HFRI Equity Hedge Total Index of 1,000 hedge funds. “Attempts” is the key word because unlike a Standard & Poor’s 500-stock index fund, which can buy each stock in its benchmark, ETFs aren’t legally allowed to invest in illiquid hedge funds.