Only one post that we felt worth your time and it’s from Russell Investments (a standard-bearer on this blog).
Russell – Seven examples of why investment is not always a zero-sum game – Here are seven instances where investment can be a non-zero-sum game. In each example, two groups of investors may hold different portfolios, each a better fit to their own situation.
Two posts this week, both looking at international market. Broad financial news outlets seemed highly focused on fixed income markets with prognostications related to US Treasuries and the negative rate via the BOJ. We thought to eschew posts similarly guessing at the future for two with sound viewpoints on critically important investment opportunities.
Columbia – Global emerging markets: Headwinds and tailwinds– Countries that are not dependent on commodity exports are well-positioned to benefit from domestic-led growth. We are finding opportunities in places like Eastern Europe, India and Mexico. We believe for this group that macro imbalances have largely dissipated, so growth can move forward on a sustainable path.
WisdomTree – Rethink Your International Allocations– But can you time those adaptive hedging moves yourself? Research we have conducted with Record Currency Management shows that it’s possible to add value over passive hedging (or unhedging) all the time. Over the last 28 years, determining when to currency hedge using a three-factor model of interest rate differentials, momentum and currency valuations has added more than 140 bps annually to the returns of a broad international hedged-equity strategy while maintaining the vast majority of the volatility reduction of strategic passive hedging.
This week’s best blogs includes only two posts. Both posts highlighted here cover macroeconomic issues impacting investors’ perspectives. They’re both heavily covered by the financial news.
BlackRock – The key ingredient needed for future returns – Going forward, the market tailwinds from debt-fueled dividend growth and buybacks will fade, and we see limited scope for further increases in U.S. equity valuations.
Lord Abbett – Emerging Markets Are Looking Attractive Again – Despite the large rally in the representative Barclays Global Emerging Market Strategy (GEMS) Index—as of April 4, 2016, up 7% from its low on January 21—we believe that there is room for further appreciation.
Posts from five different blogs in this week’s best. Some big picture (Wells Fargo), others making the case for professional money management implicitly (BlackRock), and others getting pretty technical, in the most helpful way (American Century).
American Century – CIO Insights: Oversold Conditions Opened Select Opportunities in High-Yield – During the last five years, we’ve seen two distinct high-yield spread spikes associated with risk-off financial market trading. The first was in October 2011, during the European sovereign debt crisis, when spreads soared above 900 bps. The second was in February 2016, when spreads again approached 900 bps. These periods of spread widening were accompanied by corresponding bond price corrections. In the most recent occurrence, we believe too much worst-case scenario sentiment was priced into the high-yield market, given our analytical view that China will avoid an economic “hard landing” and the U.S. will avoid recession.
BlackRock – 3 themes that will shape markets this quarter – The investing takeaway of this third theme: Investors can no longer rely on a rising tide lifting all boats. Security selection is crucial as dispersion re-emerges in asset markets.
Wells Fargo – In volatile times, a case for quality investing– We’ve explored how five different investment styles have performed during periods of high and low volatility throughout history: growth, momentum, value, minimum volatility, and quality.
William Blair – Why We Remain Cautious in Emerging Market Currencies – … our analysis shows that fundamentally attractive currencies are predominantly in the emerging world and the unattractive currencies are predominantly in the developed world.
WisdomTree – Dividend-Weighted Indexes Crush the Market in Q1 – I think there are three basic reasons why dividend stocks performed so well in the first quarter of 2016.
This week’s best blogs includes 2 from Russell and a Wells Fargo post. There’s interesting discussion of the pending DoL fiduciary changes, which is top of mind across most corners of the industry.
Russell – Today’s ESG investing is not your father’s SRI – To many, ESG brings back memories of Socially Responsible Investing (SRI) – which has typically employed an exclusionary screening based on social issues rather than investment issues. For example, electing to divest or not invest in: “Sin stocks,” like alcohol, tobacco, or pornography; or South African companies during the Anti-Apartheid Movement (originally known as the Boycott Movement) of the ‘70s and ‘80s; or fossil fuels today.
Russell – How are advisors adapting to regulatory pressures in 2016? – The question we asked was simple: “To what degree do you see the DOL proposal impacting your business if it passes?” Surprisingly, the largest percentage of surveyed advisors (35%) said they anticipated only a slight impact from the proposed rule…
Wells Fargo – Can the Treasury market’s three-legged stool cope with two legs missing? – In the final three months of 2015, foreign investors were net sellers of $50 billion of Treasury notes and bonds. China was selling a substantial amount to raise dollars needed to prevent its currency from falling precipitously (see chart below).
