While many investors in healthcare stocks may try to focus on predicting scientific outcomes, we take a different approach. We look at the return on invested capital (ROIC), and that’s how we find opportunities.
China is often seen as a source of low-cost manufacturing. Yet today, many Chinese companies are building world-class brands that are overtaking global competitors at home—and are not fully understood by investors.
US stocks continue to pose big questions for investors. After nine years of strong gains, concerns about market conditions are rife. But we think US stocks are more attractive than perceived for three main reasons.
Reduced global trade may have the unintended consequence of strengthening the US dollar, raising interest rates and pushing down stock prices. Together with tighter Federal Reserve policy, these developments may increase market turbulence.
Asset prices have far outstripped the underlying fundamental performance of many businesses, and that may pose challenges for investors now that developed economies are beginning to normalize interest rates.
US investment-grade corporate bonds look cheaper today than their lower-quality counterparts in the high-yield market. Is this the buying opportunity of a lifetime? Not exactly. A closer look reveals there’s actually method to the madness.
The Turkish lira has dropped 35% as of August 16, putting pressure on inflation as well as the country’s debt-heavy corporations and banks. Investor jitters have spread over the past week to some other emerging markets and European banks with Turkish exposure, but we don’t expect contagion to expand much further from here.
The trade war between Washington and Beijing has tipped China’s currency onto a path of destabilization. If hostilities escalate, China may let its renminbi (RMB) fall further. For investors, that could mean more volatility and tighter financial conditions.
Many investors have started to scrutinize the shape of the US Treasury yield curve, worried that a potential yield-curve inversion would mean imminent recession. In our view, things aren’t that simple.
From steel to engines to whole cars, tariffs are shifting the playing field for automakers. Our credit analysis suggests there are no winners in this war: consumers should expect higher sticker prices, companies lower earnings and investors more volatility.
Trade war’s becoming a bigger source of concern amongst investors, particularly in emerging markets, because a lot of those economies are very trade dependent. But there’s a difference between the first-order effects, the categories that are actually under trade restriction or trade tariffs now, and what might be happening in future.
A single line chart is keeping an awful lot of investors up at night: the US Treasury yield curve. It’s been flattening steadily since the end of 2016 and is nearly the flattest it’s been since 2007. We all remember what happened after that.
US companies, lured by historically low interest rates, have taken on massive amounts of debt in recent years. As rates begin to rise, investors should beware of companies that might be vulnerable to increasing financing costs.
What we’ve seen is so many different types of strategies raise tremendous amounts of capital that are competing for performance. And many of those strategies have absolutely no connection to the underlying asset.
This letter has been a long time coming. It’s time for us to talk. Buyout funds are at your doorstep.
We answer some of today’s most pressing investor questions—from the effect of trade wars with China to our expectations for rising rates and a correction in high yield.
As trade tensions escalate, investors are flocking to stocks of smaller US companies, which rely less on foreign sales than their large-cap peers. But in some industries, tariffs could affect smaller companies in unexpected ways.
Aluminum. Cars. Solar panels. It’s hard to track the tariffs without a scorecard. As headlines continue to swirl, many investors worry about the impact on the US economy. Clearly, tariffs and trade wars hurt growth, but we don’t think the impact will be big enough to derail the economy just yet.
Headlines about the death of the American shopping mall have become so common that the phrase “retail apocalypse” has its own Wikipedia page. But this is a death wrongly foretold—and that creates investment opportunities.
Thanks to the Supreme Court’s decision in South Dakota v. Wayfair, Inc., states can now choose to levy sales taxes on online transactions with no physical retail presence within the state. Our chart shows the potential impact on state budgets.
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.
Corporate investments are the cornerstone of future growth. Yet shareholders are often seduced by buybacks and dividends. Equity investors should always make sure companies strike the right balance between deploying cash flows for short-term shareholder rewards and strategic reinvestment.
A bond allocation is like a railroad. Credit is the locomotive that generates high returns, duration the track that keeps the train in line. Take the track away and you risk running your portfolio into the ditch. That’s why duration-hedged credit strategies are dangerous.
As the global economic cycle moves into a more mature stage, monetary policy is becoming generally less accommodative and inflation risk is up. Meanwhile, geopolitical risk has become a fixture of the global landscape. What does all this mean for our outlook at the midway point of 2018?
Summer is just beginning, but emerging-market (EM) bonds and currencies have been on a roller-coaster ride for months now. In markets, though, volatility breeds opportunity—and we still see plenty of that among EM issuers.
There’s new rumblings about an inverting yield curve ahead. Is it time to panic? Time to stick our heads in the sand? Or time to think sensibly?
With the global economy moving into its late-cycle stages, we think it’s a good time to bolster portfolio inflation protection by embracing several recently unloved investments—including natural resources and commodities.
US small-cap stocks have delivered strong returns in recent years. But value stocks have lagged the broader market. A closer look at what’s driving returns reveals some risks that deserve attention.
Private equity funds continue to attract interest, despite rising deal valuations and high levels of leverage. We think there’s a way to get many of the benefits of private equity in public markets—without forfeiting liquidity.
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.
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.
Bond investors are worried about rising rates in today’s environment. Many are protecting themselves by moving to cash or other very short investments. But is their “safe” choice putting them at risk?
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.
China’s markets are opening to the world—but be aware of the potential for unintended consequences. As more money flows into domestic Chinese stocks from abroad, more money is also flowing out of China, which may trigger volatility in regional markets.
High-yield investors bracing for a downturn in 2018 can relax. By some metrics, high-yield companies have rarely looked better. The way we see it, investors who do their homework can still profit in this environment.
Technology stocks are widely seen as powerful return drivers—with a lot of volatility attached. But surprisingly, shares of many companies that enable the technology revolution can provide solid returns and even downside protection.
US stocks have boomed for nine years, supported by one of the longest economic expansions in the postwar period. Can this growth be sustained? Much depends on how the challenges of environmental and social sustainability are addressed.
There are a lot of suggestions these days about where to get extra income, but less discussion about the cost attached to it. A diversified multi-asset approach can help—and provide additional growth potential. But how it’s designed matters.
While Italy’s bond yields have risen, investors have so far reacted relatively calmly to the rising probability of a populist Italian government. Based on the fundamentals, the potential downside scenario looms larger than markets seem willing to consider.
US companies reported stellar first-quarter profits this year. But some investors suspect that earnings growth has plateaued. Our research suggests that slowing earnings growth means nothing for stock prices.
Investors often say they’re worried about having too much high-yield bond exposure so late in the credit cycle. But many are still chasing returns in equities and other assets with even higher risk. We’ve got a better idea.
On May 14, new MSRB regulations will require the disclosure of the often dramatic markups that retail investors are subject to when buying individual municipal bonds. Will this accelerate the shift into active municipal bond management?
With volatility rising, many equity investors are thinking proactively about downside protection. But traditional safe havens may not do the job. Defensive equity positions can be found today in surprising places—like the energy sector.
As concerns about inflation spread, it’s time to gauge how different types of stocks will respond. Smaller companies in niche markets may be better positioned to cope with rising prices—especially in consolidating industries.
The US Federal Reserve decided against an official short-term rate hike at this week’s meeting—hardly a surprise. But US Treasury yields continue to climb in 2018, and not all the explanations are good news.
How do you blow a No. 2 draft pick? For the New York Giants, it was a combination of bad math and overconfidence. But at least Big Blue can take comfort in having plenty of company: investors, particularly high-yield bond investors, are prone to similar mistakes.
A Wall Street Journal blog on Wednesday warned that the emerging-market trade is under threat. But we think investors shouldn’t be swayed by short-term market moves. History shows that EM equity performance cycles typically unfold over several years.
It’s been a rocky start to 2018 for equity markets globally—volatility has returned with a bang and February saw the first 10% market correction in a while. So, why are active managers smiling?
Rising rates are adding new risks to equity markets. Stocks of companies that are saddled with debt have underperformed recently. And leverage is especially high in sectors widely seen as safe havens.
