The divergence between growth and value stocks is one of the biggest stories of 2018, and equity income investors find themselves on the wrong side of it. Why?
Crowded trade risks, while often unappreciated by investors, can be real and significant. They can be viewed as a byproduct of the immense proliferation of index and index-like products. While these products meet important investor needs, their predominance has led to market conditions that can greatly intensify selloffs-and could expose equity managers to greater than expected losses in the event of a market downturn.
Fed Chairman Jerome Powell will deliver his semi-annual monetary policy testimony to Congress on Tuesday and Wednesday, but he’s not expected to cover any new ground.
We know the historical evidence shows there are premiums for factors, but how can you be confident that those premiums will persist after research about them is published and everyone knows about them? After all, we are all familiar with the phrase “past performance does not guarantee future results.” Here is my answer.
Of the 14 major commodities we track at U.S. Global Investors, oil was the standout performer, gaining roughly 23 percent, followed by nickel (up 16.76 percent) and wheat (16.51 percent).
With market returns expected to be lower going forward, target-date funds that invest in passively managed underlying components are at risk of underdelivering. We think diversifying beyond traditional asset classes and tapping alpha opportunities with a multi-manager structure can increase the chances of success.
Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for July? Let’s take a closer look at the numbers.
How a fund defines its universe of small stocks eligible for purchase will make a significant difference in performance.
Yesterday’s alpha has been unbundled into market capitalization index, factors and alpha-seeking investments. What does this mean for investors? Is active dead? Of course not! But factors can enhance traditional portfolios by considering a third dimension of return.
When advisors learn that I facilitate high-performance team meetings, sometimes called study groups, they want to know how to set one up where they live. Here’s my advice.
In this issue, Research Affiliates discusses positioning for a potential inflation shock and offers insight into its collaboration with PIMCO to bring forth innovative solutions for investors.
Smart-beta funds believe that they can consistently identify mispricings by subjecting information to quantitative analysis. But numbers alone are dangerously misleading
Templeton Global Macro makes a compelling case that finding attractive opportunities in emerging markets lies in distinguishing the more resilient countries from the rest.
The Northern Trust Economics team addresses a variety of questions heard most often from our audiences.
Investor sentiment on emerging markets has swung negative in recent weeks on concerns over tariffs, trade, global growth and a resurgent U.S. dollar. However, we believe the long-term case for emerging markets (EM) in bond portfolios is still strong -- especially if you know where to look.
As expert poker player Annie Duke explains in her book, Thinking in Bets, one of the more common mistakes amateurs make is the tendency to equate the quality of a decision with the quality of its outcome. Poker players call this trait “resulting.”
Italy suffers from a series of major structural problems that, even with the best of intentions, cannot be corrected anytime soon, and the new Italian government is about to find out that it has landed in the deep end of the pool.
The days are long and people’s thoughts naturally move to the mountains, lakes, and beaches. But these coming summer days may not be so “dog-like” as we normally anticipate.
Quarterly commentary giving an overview of the markets and the importance of having and implementing a strategy when investing in the markets.
Corporate-sponsored Green programs place Apple, Google, Target, Walmart and similar ethos companies at the forefront of US Renewables policy alongside federal tax incentives, state mandates, municipalities and utility companies. Here at the intersection of Renewables, Infrastructure and Environmental, Social and Governance programs lies the tangential path to Alpha.
External pressures are mounting, but Canada’s biggest wake-up call may come from within.
This isn’t another article on what’s likely to happen to the advisory industry. I don’t have a clue.
U.S.-China trade concerns have been weighing on investors. Matthews Asia examines the strength of China's underlying fundamentals, the rate of its middle class expansion and domestic consumption.
Index provider MSCI’s decision to include Saudi Arabia in its emerging-markets index will likely transform the Kingdom’s equity market, and potentially those across the Middle East and North Africa (MENA) region, according to Bassel Khatoun and Salah Shamma, Franklin Templeton Emerging Markets Equity.
The economic calendar is modest. Volatility is lower even with plenty of news. The summer doldrums have arrived! It provides time for introspection to fill those empty timeslots and pages.
Each year, Social Security’s Trustees report to Congress on the financial status of the program. This typically generates a number of anxiety-provoking media headlines about if/when it will run out of money. Gail Buckner, CFP, our personal retirement and financial planning strategist, takes a look at the facts. She says Social Security is actually in pretty good shape overall.
The patriarch of value investing, Ben Graham, once said, “In the short run the market is a voting machine, but in the long run it is a weighing machine.” His statement is just as profound as the day it was first spoken. However, it is timelessly mystifying to most investors.
This memo covers three ways in which securities markets seem to be moving toward reducing the role of people: (a) index investing and other forms of passive investing, (b) quantitative and algorithmic investing, and © artificial intelligence and machine learning.
Energy equities have underperformed the S&P 500 materially over the last five years. While spot oil prices have risen significantly over the last twelve months, longer dated oil prices have not, and energy equities have remained under pressure.
My first book, The Only Guide to a Winning Investment Strategy You’ll Ever Need, was first published 20 years ago, in May 1998. With its 20th anniversary in mind, let’s see how my recommendations worked out for investors who followed them.
The pension crisis alone has catastrophic potential damage, let alone all the other debt problems we’re discussing in this series. You are sadly mistaken if you think it will end in anything other than a train wreck. The only questions are how serious the damage will be, and who will pick up the bill.
Fears of new threats to emerging markets have cooled stock returns after two years of hot performance. But the concerns may be overstated. The long-term risk profile of emerging markets is continuing to improve.
Investors and their advisors must be alert to managing both pre-tax and after-tax alpha in order for investors to realize the highest possible return from their taxable portfolios. Increasingly, the opportunities to accomplish both goals are within reach of investors through, for example, tax-advantaged smart beta strategies and tax-efficient vehicles such as ETFs.
Based on the logical, risk-based explanations for the value premium, and the lack of evidence pointing to shrinking valuation spreads, my conclusion is that the most recent 10 years of performance is likely just another of those occasionally occurring but fairly long periods in which the value premium is negative.
Bob Browne is an executive vice president and chief investment officer for Northern Trust. He is a member of Northern Trust's operating group and management group. He is also co-portfolio manager of the Northern Global Tactical Asset Allocation Fund (BBALX), a top-performing, multi-asset fund.
Volatility in yields got you down? Fearful of more rising rates ahead? Worried your bond portfolio will sink into the red? We have strategies that will help keep you dry, even if the waves get high.
New research shows a majority of active managers outperformed their emerging-market benchmarks, and did so by a wide margin (on average 1.57% annually). But it would be wrong to conclude that active management is the winning strategy in EM.
Is a regime shift in monetary policy imminent? One might think so looking at the yield curve flattening trend—the 5-year and 30-year Treasury yield spread has narrowed 75 basis points (bps) since September 2017 and appears to be on track to flatten entirely.
This is the fourth of what will be a long-running series highlighting dividend growth stocks that have technically entered bear market territory. Many investors define a bear market as when prices fall at least 20%. After coming out of the true bear market inspired by the Great Recession, stocks have generally been enjoying a very strong and long-lasting bull market.
At Franklin Templeton’s recent Global Investor Forum in New York, our CEO Greg Johnson participated in a panel discussion with three other CEOs in the financial services industry: James Gorman of Morgan Stanley; Jay Hooley of State Street and Barry Stowe of Jackson National Life.
While factor-based, style investing in equities has become popular, its adoption has been much slower in other asset classes, including fixed income. New research shows that style investing can also be applied to bonds.
A segment of the credit market many investors may overlook, preferred securities are one of PIMCO’s highest-conviction credit views today.
Things just got interesting – maybe. It is hard to write anything definitive given how quickly events are unfolding. Investors were taking turns being spooked by possible trade wars, cancelled (but now rescheduled) Korean denuclearization summits, and elevating unrest in the Middle East. The US market continues its volatile tug-of-war between heavy fiscal stimulus and tightening monetary policy.
Turkey’s currency crisis has spooked emerging-market (EM) investors, especially amid growing concern about the strengthening US dollar. We think countries and companies in the developing world are actually much more resilient to a stronger dollar than in the past.
Despite the evidence, strong past performance is the prerequisite for manager selection by individuals as well as institutional investors. New research explains why investors are likely to get poor results from performance chasing.
Much of the economic data suggests that the slowdown in the first quarter is passing—this morning’s personal spending report is a good example. But, as always, what matters most for the economy is jobs.
High-quality bonds and defensive stocks are on the ropes. And U.S. blue-chips look poised to roll over, if history is any guide. But what if it isn’t?
For the first time in a long while, geopolitics has been driving oil prices higher in an already tight market. With oil prices recently hitting a four-year high, gasoline prices have been climbing too, and analysts are carefully watching developments including the US withdrawal from the 2015 nuclear pact with Iran and re-imposition of economic sanctions on the country.
This shouldn’t surprise anyone, but public trust in the federal government is eroding. Sixty years ago, 75 percent of Americans expressed faith in the government to do the right thing “most of the time” or “just about always.” Seventy-five percent! You can’t get 75 percent of people to agree on anything now, as the recent “Laurel or Yanny” video proved.
Although a naïve comparison appears to favor the integrating approach to multi-factor strategy construction, after taking into account both quantitative and qualitative considerations, many investors—those seeking transparency, diversification, minimal governance oversight, and low fees—may find mixing is a more sensible choice.
