Comprehensive, revenue-neutral tax reform could give the US economy a boost. But tax cuts alone are more likely to lead to higher budget deficits than to increased growth.
Equity investors are facing a moment of truth. Is the stock market going to crest? Verifying the quality of portfolio companies today can make the difference between success and failure if conditions get tougher tomorrow.
Jerome Powell, President Trump’s pick to lead the Federal Reserve, is likely to continue the central bank’s gradual retreat from unconventional policy. But the test for a Powell-led Fed will come when the economic cycle turns.
The fixed-income offerings in a typical defined contribution (DC) menu can sometimes seem uninspired, but it doesn’t take much to improve the selection. The right combination can enhance core fixed-income allocations, providing diversification and reducing risk.
Now that talk of tax reform has taken center stage in Washington, the biggest concern for municipal investors is whether the upside of lower taxes could spell downside for their municipal bond valuations. The good news is that not every proposed change is likely to have a negative impact.
The ECB has begun its big retreat from bond buying. It’s deftly managed to avert a taper tantrum in regional bond markets, which suggests they’ll stay an attractive place for income-seeking investors to drop anchor.
As the European Central Bank (ECB) moves to reduce monetary stimulus to the euro area, it’s treading cautiously to avoid rattling currency or bond markets in the process. Bond purchases will be scaled back next year, but QE won’t be reversed.
International stocks have dominated capital market returns so far this year, prompting investors to pour nearly $75 billion into non-US equities through September 30, according to Morningstar. Yet, the case for overseas investing hinges on a longer-term rationale: Broadening your investment horizons opens up a world of opportunity.
After a relatively quiet third quarter, bond markets are ripe for some volatility and bigger waves as major central banks begin to unwind quantitative easing. For global bond investors, that could lead to new opportunities. But for now, with valuations in many sectors stretched, it pays to be selective.
What’s an investor to do, when faced with a Fed that’s gearing up to raise rates? Many investors over the past year have poured money into bank loans, in hopes of finding a panacea. Unfortunately, the bank loan market is not what it seems.
So the diversity within emerging markets and the lack of transparency within emerging markets is exactly what excites us as stock pickers.
The European Central Bank is widely expected to announce a winding down of its quantitative easing program on October 26. Though investors are nervous, the ECB is doing a good job preparing markets for the change.
Passive strategies have gained ground in some asset classes. But when it comes to municipal bonds, they don’t have a leg to stand on. In a market this complex and illiquid, an active manager is essential.
US economic activity is picking up, and as a result, we’ve raised our growth forecasts for 2017 and 2018. What’s behind the good news—and how will it impact interest rates?
Generating consistent returns under uncertain conditions is a challenge. Can multi-asset strategies make the job a little easier? We think so. But a lot depends on how they’re designed.
Tighter monetary policy in advanced economies. Stretched asset valuations. These are anxious times for income-oriented investors. But don’t worry—it’s still possible to generate income without taking on unnecessary risk.
Emerging market (EM) equities have had a great run recently. But don’t buy EM stocks indiscriminately. Focus on company earnings over macroeconomic trends to find stocks that have stronger return potential with reduced risk.
It’s not normal. When a fixed-income sector beats the S&P 500 over an extended period and by a meaningful amount, investors do a double take.
Global equities advanced in the third quarter, as steady macroeconomic growth supported solid earnings reports. In the evolving market environment, we believe that individual company performance will make a bigger difference to stock returns.
High-yield bonds have had a good run. But with interest rates rising, has the market run out of road? Don’t bet on it. The sector usually motors ahead when rates rise. And when it does decline, it rebounds rapidly.
Investors pursuing high dividend yields are paying a sizable premium today, judging from valuations of the biggest stock holdings across the 10 largest dividend-focused exchange-traded funds (ETFs). In fact, these stocks are trading in line with the valuations of their growth counterparts today.
Amazon.com has shaken up US retailers and manufacturers, a trend amplified by the recent purchase of Whole Foods Market. But despite Amazon’s dominance, investors can still find resilient businesses in a vast sector.
Bonds in the US high-yield market are as varied as the creatures in the sea. Invest carelessly, and you may get stung. But with careful analysis, investors can uncover gems at any stage of the credit cycle.
In the second quarter, the global economy produced its best showing in six years, based on our estimates. Has strong growth continued in the third quarter? Survey data suggest the answer is yes.
The long-anticipated unwinding of quantitative easing (QE) in the US is set to begin, just as the Fed’s leadership faces a wave of turnover. We think a strong foundation should keep steady US economic growth on track.
Investors all over the world often prefer to stay in their home markets. But at what cost? Going global can open up a world of choice to help improve a portfolio’s equity risk and return profile.
Today’s low bond market volatility won’t last forever. But knowing whether a correction will come next week or next year isn’t so important. Having an efficient trading strategy that can execute in both tranquil and turbulent markets is.
Should tighter monetary policy on both sides of the Atlantic worry bond investors? We don’t think so. Bonds have historically delivered positive returns when interest rates rise—particularly when they rise gradually.
Value stocks have underperformed most other styles of investing, as well as the broad market, by a wide margin since the beginning of 2015. We see several reasons why, which point to the catalysts for a potential recovery; we do not think Value is past its prime.
China is dropping its focus on “dirty” industrial growth, while making a massive shift toward renewable energy and a less resource-intensive path to economic success. This reorientation could open up substantial opportunities for equity investors.
The investing industry is constantly devising new acronyms and buzzwords. Sometimes these can be dangerous. The rise of the FANG stocks highlights how clusters of stocks may create investing hazards that standard risk models struggle to detect.
What shouldn’t you do as the Federal Reserve tightens policy? You shouldn’t be passive. Passive muni investors suffer from the painful phenomenon of clipped wings. That’s when passive strategies can’t rapidly reinvest in higher-yielding securities as rates climb, unlike their more nimble, actively investing cousins.
Afraid you’ve missed the rally in emerging-market (EM) assets? Don’t be. Responsible policies and pragmatic politics have taken hold in many developing countries. That bodes well for growth and suggests the rally has room to run.
When the Federal Reserve starts raising interest rates, the knee-jerk reaction for many investors is to reduce exposure to US Treasuries and load up on credit assets, which tend to be less sensitive to interest-rate changes.
Sentiment toward hedge funds has been negative in recent years, in large part because industry returns were poor in 2015 and the first half of 2016. Also, CalPERS and other institutions left the asset class, amid a wider debate about active management in general, and hedge funds’ fees, in particular.
Never before in the US have we experienced a natural disaster of the magnitude of Harvey. The damage is of such a degree that we find it nearly impossible to comprehend. Yet Harvey does not stand alone. Climate events that preceded it give us much-needed insight into how municipalities recover, and whether disasters precipitate credit defaults.
From nuclear tensions with North Korea to turmoil on the streets of Charlottesville, political risks have been hovering over equity markets again. We think investors should be on alert for a potential resurgence of volatility.
Preparing for a stock market correction? We’ve got another thing to add to your to-do list: take a look at your fixed-income holdings, too.
Solid economic growth and receding political risk continue to support sentiment towards European equities, despite the recent market pullback. As market conditions shift, a selective focus on companies with underestimated profitability is essential for investment success.
Speculation is building about a looming shake-up in the leadership of the US Federal Reserve. Transitions are nothing new—but the stakes this time are unusually high for the economy and markets.
Political fireworks from developed economies have been front and center for most investors. But under the radar screen, there’s been a healthy turnaround in emerging markets that’s generating appealing fixed-income opportunities.
The US Department of Labor (DOL) has cut financial advisors some slack in getting ready to comply with its new fiduciary rule. But defined contribution (DC) plan sponsors don’t have the same luxury.
Equity investors are increasingly focused on short-term results. In an impatient marketplace, investors can discover powerful sources of returns in emerging-market companies that deliver extended growth over several years.
Reading the signs in markets can be tough. When he headed the Federal Reserve, Alan Greenspan missed early signs of a housing bubble. Now he’s warning of a bond bubble that’s about to burst. We disagree.
Looking for a way to increase your US exposure without adding equities? Need more income but worried about rising rates? US high-yield bonds deserve a place in your portfolio.
The Trump administration is starting to consider a replacement for US Federal Reserve Chair Janet Yellen after her term expires. This is only one potential leadership change in what could be a wave of turnover ahead for the institution.
A decade ago, we got the first warnings that the US subprime crisis would go global. Since then, monetary policy has pushed deep into unconventional territory. How will it respond as the backdrop begins to look more “normal”?
As an asset class, fixed income generates longer-term returns that are largely predictable. So why are those returns not always a reasonably sure thing, and why is there controversy around the methodology being used for making predictions for one sector in particular?
Even amid the midsummer lull, more investors are hunkering down and preparing for a potential correction. As the S&P 500 Index continues its relentless grind higher, we think it’s worth considering proactive steps for a change in the environment.
