The past few decades presented an outstanding market environment for the asset management industry. Global AUM rose at a steady pace between 2001 and 2021, thanks largely to the strength of the world’s equity markets, which were able to rebound even after several severe downturns. And 2021 was even stronger. Global AUM grew at 12% last year, to more than $112 trillion, a growth rate well above the 7% average of the previous 20 years.
Last week, the Boston Consulting Group (BCG) released its 20th annual report on the global asset management industry, it offers a retrospective analysis of the effects of this strong market – and as the industry enters a more uncertain era, it looks at the expected impact of new technologies such as direct indexing, increasing investor demand for alternative products, and a focus on decarbonization.
Mutual Funds
Insuring Client Spending in Retirement with Portfolio Income Insurance
With the growth in 401(k) plans and the contraction of private pensions over the last 30 years, risks in retirement have slowly and almost imperceptibly transferred from institutions to individuals. Institutions staffed with actuaries and analysts are well suited to manage those risks. Individual investors may need some help.
This session introduces a relatively new kind of portfolio income insurance: a Contingent Deferred Annuity. It unbundles the insurance from underlying investments so that advisors may “wrap” the risk in client portfolios by covering investments in retail ETFs and mutual funds with lifetime income protections.
Tackling restrictive Fed policy, inflation and a recessionary sentiment with Defined Outcome ETFs
The Fed’s move towards more restrictive policy has rattled bonds and put equities on the brink of a bear market. But what is priced in and where do we go from here? In this month’s webinar, we discuss equity and fixed income valuations and examine how Innovator ETFs can help advisors hedge market risk and capitalize on opportunities.
The Case for Non-US Investing
After nearly a decade of outperformance by US stocks, the tide may be turning as the world faces new challenges in this post-pandemic environment. Get insights into non-US markets in an insightful discussion featuring Grady Burkett, CFA, and Krishna Mohanraj, CFA, international equity portfolio managers from Diamond Hill. This informative session will explore Grady and Krishna’s perspectives on why investing in non-US markets today may be beneficial for long-term results and how investors can position themselves for success in this environment. Thoughts on the war in Ukraine and an update on global supply chain headwinds will also be given
Treasury Snapshot: 2-10 Spread at 0.1%
The yield on the 10-year note ended June 28, 2022, at 3.20%, the 2-year note ended at 3.10%, and the 30-year at 3.30%.
Don't Fight the Trend
Given the Fed's hawkish monetary policy agenda and its effect on asset prices, I thought it might be helpful to share my thoughts on Fed-based trend analysis.
More “Stagflation-Lite”, Moderately Positive On Equities Ex Europe, Still Negative On Global Bonds
Our mid-March meeting’s “unenthusiastic” stance on global equities and negative stance on global bonds was a respectable decision, as was the overall macro theme “Stagflation Lite with GDP somewhat worse than consensus, but skirting recession.”
3 Charts Showing Optimism For The Global Shipping Industry
Container shipping companies have not been immune to the disruptive factors roiling markets at the moment, namely rising interest rates, soaring inflation and a potential recession, not to mention war in Eastern Europe.
Time to Jump Aboard the Value Train
The market has spent much of 2022 worrying about inflation and associated interest rate rises, and Growth stocks have certainly borne the brunt of this.
How a New Zealand Superfund “Beat the Market”
It came as a surprise when I found the annual report of the New Zealand SuperFund. While no one could fault it for sticking with passive investments, it chose a different path, with stunning results.
Mortgage Lenders Turn ‘Desperate’ as Soaring Rates Roil Industry
Business has started to evaporate across home-lending firms in recent weeks, after the Federal Reserve boosted borrowing costs to tame decades-high inflation.
April S&P/Case-Shiller Home Price Index: Up 20% YoY
With this morning's release of the April S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 1.8% increase month over month. The non-seasonally adjusted national index saw a 20.4% YoY increase.
Re-discovering the Market’s Sweet Spot
There’s a tendency among investors to conflate exposure to the S&P 500 with exposure to the broad market, even though these stocks are almost all large caps.
A Deep Analytic Perspective of the 2022 Market Correction
I will demonstrate how financial advisors can combine behavioral finance and deep analytics to have a robust conversation with clients during financial turmoil, showing compassion and understanding on the one hand, while telling a compelling long-term story on the other hand.
An Ominous Sign for ESG Investors
Contrary to economic theory, in recent years funds with an ESG mandate have outperformed the broader market. New research shows that outperformance was caused by increased asset flows to so-called green stocks, raising the prospects for lower returns going forward.
Of War And ESG
Sustainable investing needs to adapt to new realities without compromising its core principles.
Meta Plunge Lures Value Buyers as Growth Funds Flee
For years, investors valued Facebook’s parent company as if its growth would never falter. Now that it has, fund managers who buy cheap, out-of-favor stocks are finally getting a chance to own shares of Meta Platforms Inc.
Crypto Stocks Show Why They’re Among the Riskiest of Risk Assets
Crypto curious stock investors are taking little comfort in the rebound in the shares of companies linked to the digital-asset world in the past week, with the sector underperforming just about every other risky corner of the financial markets this year by a wide margin.
Market Is Shredding All the Time-Tested Ways to Chart Its Course
Options insurance. Hedging with Treasuries. Using sentiment to pick a bottom. The things that have lessened the pain of past equity selloffs are coming up short this time around.
A New “Pink Tide” in Latin America?
Latin America tilted further left this week as Colombian voters elected Gustavo Petro as president. Come August, the former Bogotá mayor and member of the M-19 guerrilla organization will join the region’s growing list of leftist leaders in a political shift some are likening to the “pink tide” of the late 1990s and early 2000s.
Inflation Reaches Unicorns
Interest rates aren’t simply the price of borrowing money. They are also information, providing signals telling economic players what to do. Interest rates are in fact the price of time. Low interest rates don’t value time very much. Bad signals produce bad outcomes… and that’s where we are now.
Banks Ace Fed Stress Tests, Pave Way for Shareholder Payouts
Wall Street’s biggest banks are set to return tens of billions of dollars to investors after all the lenders passed the Federal Reserve’s annual test of their ability to withstand market turmoil.
Taking Stock: Q3 2022 Equity Market Outlook
What to do in equity portfolios at the midyear point? Fundamental Equities CIO Tony DeSpirto assesses the backdrop and identifies three favored sectors.
How to Invest in China Responsibly
Investors in China can positively influence the behavior of Chinese companies and generate attractive risk-adjusted returns in the long run.
Night Moves: Is the Overnight Drift the Grandmother of All Market Anomalies?
If finance could be distilled into one idea, it likely would be that there should be a tradeoff between risk and reward: an investment with low risk should have a low expected return, while one that could make you rich should also be one that could lose you a lot of money. The Overnight Effect flies in the face of this core tenet.
Time To Jump Aboard The Value Train
In a new piece, GMO’s Asset Allocation Team notes that even with the battering of growth stocks in 2022 there is still ample opportunity to benefit from betting on cheap value stocks versus expensive growth names.
Wall Street South Gets Biggest Win in Griffin’s Grand Miami Plan
Ken Griffin just set a new standard for Wall Street firms looking to make the move south.
Treasury Yields: A Long-Term Perspective
As of May 31, 2021, the 10-year note was 233 basis points above its historic closing low of 0.52%, reached on August 4, 2020
Stocks Adding to Weekly Gains
U.S. stocks are extending weekly gains, rebounding from yesterday afternoon's slide as the markets remain choppy amid lingering global recession concerns that have been bolstered by monetary policy tightening efforts around the globe aimed at getting high inflation under control.
Stocks Sniffing A Bear Market Rally
A number of key technical, sentiment and flow based indicators are suggesting we could see a relief in selling pressure over the coming weeks, and perhaps a countertrend rally in risk assets.
Wall Street Faces Billion-Dollar Losses on Sinking Buyout Debt
Investment bankers in the US and Europe are bracing for potentially billions of dollars in total losses on big-ticket leveraged buyouts as they struggle to offload risky corporate debt that’s plunging in value amid a sweeping market selloff.
Stocks Are Losing the Race With Bonds in Era of Tightening Fed
Bonds have been whispering in the ears of stock investors all year. Now they’re starting to shout.
This is Not the Market Bottom
Two forecasting methods predict a 54% stock market loss in 2022. Someday the stock market bubble will burst. But the data says we have not seen the worst of equity market declines.
Why I Consulted with an Active Fund Manager
Why would I work to increase the profile of an active fund manager? My reasons reflect the increasing pressure on advisors to differentiate themselves and demonstrate value.
The US Economy Is Headed for a Hard Landing
If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the US economy, abandon it.
An Established Case and Emerging Trends for Frontier Markets Equity Investing
The terminology ‘Frontier Markets’ inspires images of exotic geographies, colourful politics and investor adventurism.
Big Banks Led by JPMorgan Set to Return $80 Billion to Investors
US banking giants are poised to return $80 billion to shareholders after this year’s Federal Reserve stress tests, less than last year’s elevated level that followed a pandemic-driven buyback pause.
“Economic Hurricane” – Hyperbole Or Real Possibility?
An “economic hurricane” is coming.
How Venture Capital Thrives by Betting on Weirdness
Who would want to be tasked with investing their own and other people’s money in companies run by weirdos and jerks? But that turns out to be one of the most important skill sets shared by successful venture capitalists.
Private Equity’s Crisis First-Timers See Their Playbook Shredded
Private equity bosses are finding history to be a lousy guide as they hunt for clues on how to work through the turmoil in global markets.
Inflation in Japan Should Be Cheered, Not Feared
Japan has been stuck in a low growth, low inflation (and at times, deflationary) environment.
Number of Underwater Russell 3000 Stocks Surges to Record
The number of Russell 3000 companies, excluding financial firms, trading below cash has surpassed the month-end record set during the global financial crisis.
ESG Investment Cools as the Sector’s Notoriety Grows
Since the start of 2019, investors have plowed more than $300 billion into environmental, social and governance (ESG)-themed exchange traded funds.
Goldman Buyback Desk Was Flooded With Orders During Stock Rout
While hedge funds were busy bailing from stocks at a record pace as the S&P 500 plunged into a bear market, Corporate America was furiously buying.
Tech Bear Market’s Latest Casualty Is Pandemic-Era Convertible Debt
The equity-linked debt of some of the pandemic’s darlings has plunged to record lows and is now considered distressed.
Federal Reserve Must Do More Than Raise Rates by 75 Points
While the market chatter in the run-up to Wednesday’s Federal Reserve interest rate decision has understandably focused on whether the increase will be 50 or 75 basis points, the critical issue in play is a broader one.
Big Money in Stock Market Is In Mad Dash to Get Out of Fed’s Way
Despite a lot of confident predictions, nobody knows what will happen at the Federal Reserve Wednesday, never mind what the impact will be on markets.
June Swoon: U.S. Stocks Slip Into Bear-market Territory As Inflation Concerns Rattle Investors
After months of hand-wringing, U.S. indexes are now in bear-market territory across the board, down 20% from their most recent highs.
The State of Sustainable Investing
Over the last year, we’ve experienced heightened macroeconomic uncertainty with several events impacting society and financial markets.
Bear Watch
With stocks down around 20% year-to-date, it is important for investors to know what kind of bear they are dealing with.
Technical Perspective: Using Stochastics to Help Advisors Navigate the Markets and Stock Positioning.
The Stochastic Oscillator (Stochastics) is one of the commonly used technical indicators by market participants.
Will the Fed’s Third Mandate Derail Markets?
Recent experience shows that a third mandate – preventing financial instability – trumps the Fed’s two congressional mandates of full employment and low inflation.
The Future of Food is Technology
In our new piece from the Franklin Templeton Institute, we examine the challenge of feeding a growing global population in the midst of climate change, geopolitical shocks and uncertainty.
Tesla, MicroStrategy, Ark ETF Need to Capitulate Before Stocks Bottom
MicroStrategy Inc., ARK Innovation exchange-traded fund, Tesla Inc. and Twitter Inc. are what I’m watching to identify the ultimate capitulation point of this cycle.
Americans Are Building Vacation-Home Empires With Easy-Money Loans
For as long as the market allows, brokers, lenders, and investors are cashing in on the real estate boom in America’s prime vacation spots.
Signs Point to Rising Recession Risk
Rising inflation, rate hikes, supply-chain problems and the Russia-Ukraine war have contributed to growing recession fears.
Is the Real Economy as Weak as Markets?
“This market has a 1929 like feeling....”
Opportunities in Tax Efficiency
I have identified a few opportunities within my portfolio and wealth management practice that prompt consideration for your own strategies as you plan for large estates.
How to Build a Diversified Crypto Allocation
Several avenues for diversifying cryptocurrency portfolios exist. Investors should weigh the costs and benefits of each of the following three methods.
Inflation Risk: Persistent or Transitory is the Wrong Question
Persistent … or transitory? It’s the inflation question that has been weighing on financial markets over the last year. As each economic data point trickles out, it is analyzed and re-analyzed, with that focus in mind. But it may be the wrong question to ask.
The Fed Has No Choice But to Let This Tantrum Rip
With the Federal Open Markets Committee due to meet Wednesday, there was no way policy makers could guide the market on how last week’s awful inflation data for May had changed their plans.
Red-Hot Lithium Boom Pits Wall Street Against the Wonks
There’s a fight brewing in the lithium market, after a controversial forecast from Goldman Sachs Group Inc. analysts set off a backlash among some of the industry’s most prominent experts.
Global Stock Rout Prompts Call for Back-to-Basics Investing
Traders unnerved by a selloff that hit stocks and bonds alike are looking for refuge, increasing the appeal of investments offering reliable returns such as shares that pay steady dividends.
Engine No. 1 and Its Compelling Approach to ESG Investing
As proxy season comes to a close, investors and advisors have grappled with company stewardship on a wide variety of issues. But what’s the best way to get a company to listen? Is divestment the way to go? Or must you engage with a company? And how do investors in ETFs and mutual funds make sure their voices are heard at the asset managers they invest with?
Engine No. 1 focuses on engaging with companies constructively to make sure they are taking the costs they impose on society and other stakeholders into account. It operates on the belief that climate and social concerns are economic issues and companies that fail to address them will underperform for the long term.
Wall Street Sours on S&P as Margin Woes Rattle Corporate America
Wall Street is afraid to buy the dip this time around. Even amid this latest leg of the stock market selloff, equities still aren’t fully reflecting the risks facing corporate earnings...
Semiconductors: A Less Cyclical Future
The proliferation of semiconductors throughout our economy may drive more durable, less cyclical demand and earnings.
Sobering News for ESG Investors
New research shows that positive returns to ESG portfolios from 2018-2020 were attributed to increased demand for “green“ stocks, raising the question of whether that outperformance will be sustained.
A Streamlined Approach to Multi-Asset with the S&P Target Risk Indices
Multi-asset strategies have caught the eye of market participants seeking pre-packaged solutions to diversification. Whereas many of these strategies are becoming increasingly complex—with black-box allocation algorithms, multiple signals, and 10 or more components—the S&P Target Risk Indices offer a more transparent approach.
Read on to explore:
Mid-Cap and Small-Cap Dividends Shine amid Volatility
In our third of three posts on small-cap valuations, let’s examine how focusing on dividend payers amid a volatile market backdrop has provided excess returns, with even lower valuations.
FOMC Preview
What will be the Fed's next steps after a rapid course correction?
Investor Behavior: A Tragic Love Story
Investors are a fickle bunch. They love owning stocks when the market goes up. It feels great! So great, in fact, that pesky details like nosebleed valuations or a lack of profitability are easily overlooked. But the romance never lasts.
Stocks and Bonds Remain Weak On DMA Table, New Buy Salesforce.com Inc (CRM)
We are treating this column like a running conversation with the reader.
‘Straightforward Bad’: Stock Investors React to Inflation Report
US consumer prices surged to a 40-year high, defying expectations that gains would start to moderate after the Federal Reserve began tightening.
Are We Headed for Recession? Gold and Bitcoin Could Offer Some Cover
There’s no way of knowing for certain whether a recession is imminent, but for many Americans, it’s sure starting to feel that way. According to Google, more people in the U.S. searched for the term “recession” than at any other time in the past two years.
Saving For College: Start Small, But Start Now
With National 529 Day last month and graduation season underway, the cost of education is at the top of many people’s minds.
How I Protect Against the Coming Market Crash
Those who are familiar with my articles know that I see market crashes in stocks and bonds occurring in this decade, combined with serious inflation. Readers ask how I recommend protecting. This is it.
Wood Sees Huge Inventories as Evidence Inflation Will Ebb
Cathie Wood says the massive inventories now held by US companies suggest that inflation will die down.
Does This CDO Come in Green? With ESG Everywhere, Buyers Beware
It started with bonds. Now even collateralized debt obligations (CDOs) come in green.
Today's Options Market Update
Stocks modestly lower ahead of tomorrow’s inflation report.
Global Luxury Sales Expected To Recover As Shanghai Ends Lockdown
Shanghai, the Chinese commercial hub with 26 million residents, ended its two-month citywide pandemic lockdown last week, a sign that the world’s second largest economy may be ready to return to business-as-usual.
Why Some Value Strategies Struggle When Value Stocks Surge
Not all value strategies have benefited equally during value stocks’ recent outperformance versus growth stocks.
Why Compounding is so Difficult
How many billionaires are there in the United States?
‘Train Wreck’ Economy or Red-Hot Inflation Is Big New Bond Call
A wild year on Wall Street has traders fretting one of two extreme scenarios will engulf the $23 trillion Treasury market ahead: Either a fresh bond selloff thanks to red-hot inflation -- or a sustained rally on mounting recession risk that sends yields back toward historic lows.
Bull Market Rhymes
Howard Marks’s latest memo explores recurring investment themes to contextualize the current market correction and the bull market that preceded it. He discusses the role played by financial innovations like SPACs and cryptocurrencies and why he believes psychology, not fundamentals, primarily drives investment cycles – and likely always will.
When Quality Fails
Academics argue that there are three proven factors of investing: Value, quality and momentum.
Most of Bitcoin Pandemic Gains Came While Stocks Were Closed
Most everyone knows that Bitcoin had a stellar two years when the pandemic broke out. But just about all of the coin’s gains since then have happened while US markets are closed.
Housing Is Correcting, Not Crashing
A cooler housing market isn't a bad outcome.
Quick Thoughts: Navigating Uncertainty In A Rapidly Changing World
Thoughts on recent market volatility and implications for investors from Head of Franklin Templeton Institute, Stephen Dover.
The Overarching Themes in the Asset Management Industry
The past few decades presented an outstanding market environment for the asset management industry. Global AUM rose at a steady pace between 2001 and 2021, thanks largely to the strength of the world’s equity markets, which were able to rebound even after several severe downturns. And 2021 was even stronger. Global AUM grew at 12% last year, to more than $112 trillion, a growth rate well above the 7% average of the previous 20 years.
Last week, the Boston Consulting Group (BCG) released its 20th annual report on the global asset management industry, it offers a retrospective analysis of the effects of this strong market – and as the industry enters a more uncertain era, it looks at the expected impact of new technologies such as direct indexing, increasing investor demand for alternative products, and a focus on decarbonization.
ESG Investing Is Heading for a Reckoning, Says One Veteran Manager
The ESG investment industry may be headed for a reckoning and many companies won’t survive this period of higher interest rates.
The Biggest Threat to the US Economy Is Policy Makers
Something still feels off in this economy. It’s booming in many respects, with a strong labor market, healthy corporate and household balance sheets, and a lot of consumption. But some, like JPMorgan Chase & Co. CEO Jamie Dimon, are worried we’re seeing the calm before the storm.