Calamos Investments

Even with all the benefits attributable to closed-end funds—intraday trading, low financing costs of leverage, ability to be fully invested, and consistent source of income—they have some idiosyncrasies that present challenges, especially during extreme volatility

The pace of government and private sector response will likely be slower than we may like, but we have the collective knowledge to address the pandemic, including support to individuals and businesses.

Michael Grant is preparing for rebound in equities and has positioned the long/short portfolio accordingly. To use a Wayne Gretzky analogy, he is skating to where the puck will be, not where it is.

Global markets have not yet reached a bottom, but Nick Niziolek believes the global economy and markets could be in recovery mode by the second half of the year, with China and other overseas markets making strong contributions.

Equity markets have bounced around rather dramatically in recent weeks (up and down) as investors are trying to get a grasp of the impacts of Covid-19 (aka Coronavirus). While there will clearly be economic softening from Covid-19, the base case is that it will be transitory.

Never underestimate the growth potential of a small company with a good idea and a solid plan. The rest of the world may be on pause, but there’s no stopping the forward momentum of U.S. creators, innovators and disruptors.

Join us at 2 p.m. EDT Tuesday, September 24, 2019, to learn why the Calamos Timpani Small Cap Growth Fund (CTSIX) team is enthusiastic about the opportunities it’s finding today. With small caps trading at a discount not seen since 2003, the price is right—and the potential for growth is irresistible.

Presenting on this Advisor Perspectives-produced Webcast will be Brandon M. Nelson, CFA, Senior Portfolio Manager, and Ryan Isherwood, CFA, Senior Research Analyst, Co-Portfolio Manager. Nelson and Isherwood joined Calamos following our 2019 acquisition of Timpani Capital Management, the company Nelson co-founded in 2008. Nelson served as Chief Investment Officer and Portfolio Manager of the Timpani strategies since inception. The Calamos Timpani Small Cap Growth Fund combines fundamental research with the analysis of market estimates to identify the underestimated growth differential between a company’s business strength and market expectations of that strength.

The S&P 500 had its best first half of the year in 22 years and its best June since 1955. And yet, many investors have been calling the end of the bull market for months.

Looking forward, we believe the U.S. economy will extend its steady expansion through this year and beyond. The global economy is positioned for moderate growth, with a pickup in the second half of the year. The relatively weaker earnings season currently underway reflects a high bar in terms of year-over-year earnings growth...

Is the stock market correct in its optimism that monetary normalization is over and equities have more runway in 2019?

Following a painful and broad fourth quarter selloff, risk assets rebounded in the first weeks of 2019 as optimism has grown about Fed accommodation, earnings, China stimulus and an eventual trade dispute resolution. However, investors should be prepared for choppy markets, especially through the first half of the year.

December’s market volatility was what most investors would expect to see only in a stress test scenario. The VIX jumped from 16 to 36 and back down to 25 all in the span of one month. We talked to Dave O’Donohue, Senior Vice President and Co-Portfolio Manager, about how he and the Calamos Market Neutral Income Fund (CMNIX) and Calamos Hedged Equity Income Fund (CIHEX) team view volatility and how they reacted to the big swings in volatility during December.

Whether or not one believes in the “October Effect,” investors can’t be blamed for giving it credence this year. Worries about trade, the Federal Reserve and global growth roiled the markets as the fourth quarter began. Even U.S. equities—which had roared through the third quarter as investors focused on positive economic data—succumbed to the selloff that gripped risk assets.

I believe the economy can withstand this short-term pullback and continue on its growth trajectory for the next year, if not longer. There are many reasons to be positive on the U.S. economy. Even if markets move sideways over these next months and volatility intensifies, there are still many opportunities, including in equities, convertibles, fixed income and alternative strategies.

Fears of an imminent U.S. recession are premature; tax policy and a more business-friendly regulatory environment provide long-term catalysts for the economy. Although conditions outside the U.S. are less encouraging, positive global growth should continue, albeit with growing divergence among countries.

During the second half of the year, convertibles should benefit in advancing but volatile equity markets. Convertibles have outperformed bonds during rising rate environments. Thanks to their equity characteristics, convertible securities have performed well versus bonds during periods of rising interest rates—including this most recent period.

Last week’s Barron’s cover story asked whether U.S. value stocks are primed to break out of their “funk” after 10 years of underperformance vs. growth stocks. Many of the “growth” companies that dominate growth indexes/portfolios and look more “expensive” are actually the winners of secular changes that have occurred while value indices/portfolios are littered with casualties of the change.

Conditions we are seeing today are more normal than recent years, when investors grew accustomed to record low interest rates, a near-absence of inflation and the subdued volatility. We expect coordinated global economic expansion will continue through 2018, although improvements in some economic fundamentals may have peaked.

Our current positioning reflects the following beliefs: Many of 2017’s positive economic tailwinds should continue in 2018, setting the stage for additional upside in stocks and other equity-sensitive assets, including convertible securities and high yield bonds.

Heading into 2018, we remain positive on global equities and believe the outperformance of international risk assets can continue. In the years following the Global Financial Crisis, uneven global growth created headwinds for risk assets outside the US. Typically, one or two regions would show improvement, while other regions decelerated.

2017 is the first post-crisis year that markets are enjoying the fundamentals of stable and synchronous global GDP. This is why the character of equity returns has become less volatile. Equities are taking their lead from the earnings cycle. As long as the year-over-year growth in sales and earnings is improving—which has been true since Q1 2017—market corrections are typically modest.

We see a strong case for convertible securities at this point in the market cycle along with our expectations going forward.

The Fed just gave us its wish list in a best-case scenario. But as the saying goes, if wishes were horses, beggars would ride. In short, Chair Yellen’s remarks, while detailed, are largely theoretical and dependent on many variables that may or may not happen. It would be wrong to assume that a bear market in bonds is a foregone conclusion.

As interest rates rise, it’s that time in the cycle when many advisors are turning to convertibles for shorter-term tactical overweights. Convertible bonds, which combine characteristics of stocks and traditional fixed-income securities, have historically outperformed fixed income during periods of rising interest rates.

During the first quarter, global issuance was a very healthy $24.3 billion, the strongest quarter in nearly two years. U.S. issuers led, bringing $13.0 billion to market, followed by Europe at $7.6 billion. Encouragingly, nearly all U.S. issuance was in the form of convertible bonds.

The proliferation of liquid alternative mutual funds happened in response to the 2008-2009 recession, which was followed by an extended period of unusually low interest rates.

“There are decades where nothing happens; and there are weeks when decades happen.” —Vladimir Lenin The reflation move since November has been aggressive but appears more right than wrong.

The Calamos Global Equity Team explains why they view India as one of the most compelling stories in the emerging markets.

It’s important to keep a long-term perspective and remember that the markets are tremendously resilient. Just a few months ago, markets were roiled immediately following the Brexit referendum, only to come back strong within just a few days. In regard to the economy, Donald Trump’s victory echoes Brexit, and speaks to a widespread desire for change. It is my hope that the Trump administration will focus on developing fiscal policies that incentivize entrepreneurship, private sector growth and taking responsible risks with capital.

In our alternative portfolios, we have the flexibility to use a range of sophisticated strategies—bullish, neutral and bearish hedges, convertible arbitrage and covered call writing, etc. Guiding principles include taking advantage of opportunities the market presents.

Markets are once again facing a proverbial wall of worry, built of political uncertainty, populism, and fiscal and monetary policy concerns. Although the market’s ascent is not likely to be straight up (it never is), we are cautiously optimistic that the wall can be surmounted.

Over the 12 months to mid-2016, global equities witnessed abnormal volatility driven by both macro and micro concerns. This reflected a more complex investment setting.

Today’s post continues our series on how economic reforms provide catalysts for growth in emerging markets, such as India, Thailand and the Philippines. Below we consider Indonesia, where a tax amnesty program, cabinet reshuffle, and a range of other reform policies create tailwinds for growth