Specialty Investments

The Momentum factor picked up where it left off at the end of the first quarter, turning in another standout performance in the April-through-June timeframe and ending the second quarter as the factor most relevant to positive performance.

The second quarter began with inflation concerns causing a negative return in April, but improved inflation led to a more hopeful market in May and June, with AI and semiconductor stocks leading.

It’s earnings season yet again. And I think this one is going to be more down-to-earth than the ones we’ve had over the past year.

Elections have been anything but easy for investors. What has been easy is financial conditions in the US relative to the level of policy rates, fostering the debate over the degree of policy restrictiveness as global monetary easing begins.

Diverse stakeholders shared perspectives at AB’s Advancing Retirement Income symposium.

In this article, Russ Koesterich discusses why bonds are still not a reliable hedge for equities in an environment where inflation remains elevated and volatile.

Comparing public fixed income and private credit markets involves weighing factors related to liquidity, transparency, credit quality, risk premium, and opportunity costs.

Many investors hold a concentrated stock position that represents a large percentage—typically 10% to 20%—of their overall portfolio value. Let’s review the risks of concentrated positions and then survey some of the possible solutions.

Last week we had our quarterly live call for Yield Shark subscribers. We had some great conversations over the course of the hour. One of the major topics that came up was what will happen through the end of the year. Will we see a correction or a rotation? If so, when will this happen? And most important, how can we prepare?

In this piece, we attempt to answer a number of questions we have gotten from clients about the impacts that rising levels of passive investing may have had on the stock market.

The giant federal debt we’ve been talking about isn’t just borrowed money. It is also lent money. Loans are two-party transactions. One side receives temporary use of cash which it agrees to repay with interest. The other gives up the current use of that cash in exchange for receiving interest. Ideally, it works out for both… but not always.

In the second half of the year, investors will likely be navigating a potential divergence in monetary policy among the major economy central banks, a more normalized U.S. interest rate regime, and an equity market that may favor quality.

Confidence is up, but inflation and other worries offer ways to work toward better outcomes.

Inflation is not fun. And—for the past 30 years—it has largely been a non-issue for consumers. That dynamic has changed. The relevant question is whether this is something persistent and meaningful or simply a fleeting feeling.

I was a landlord once and it didn’t turn out how I expected. I think it mattered that I didn’t set out to be a landlord. I had bought a house in Baltimore City that I expected to live in for many years.

Defending my love of dividends consumes a lot of my time. Sometimes I’ll pull out my track record. Other times I explain how owning boring and stable dividend stocks means I spend less time watching and worrying about them.

A defining feature of the post-COVID investment regime has been the persistence of elevated market uncertainty and volatility. The below visual highlights how this has led to a wider range of market performance outcomes, focusing in on the vast difference between the last two calendar years.

Our actively managed equity funds that employ machine learning (ML)—and their shareholders—are starting to benefit, according to Cesar Orosco, CFA, and Scott Rodemer, CFA, of Vanguard’s Quantitative Equity Group (QEG). The group develops quantitative models that attempt to replicate what a good fundamental investor would do, but systematically and at scale.

The Federal Open Market Committee is always data-dependent. But the dependency is not always the same. There are times when inflation matters more than the labor market, and times when the situation is reversed. Every regime is unique. There is never a perfect corollary to a previous experience. This time is not different.

Since the Global Financial Crisis of 2007-09, fixed income investors have suffered the worst of both worlds. For a dozen years they endured the stingiest of yields on their fixed income holdings.

Ross Riskin's op-ed examines the potential drawbacks of using glide path portfolios in 529 college savings plans, particularly during high-interest rate environments. He suggests that money market options may offer better capital preservation for funds needed during college enrollment, emphasizing the shift from growth to stability in investment strategies.

VettaFi discusses changes in the MLP/midstream investment product landscape.

Some of the biggest names in tech started paying dividends this year. This includes Alphabet (GOOG), Meta Platforms (META), Salesforce (CRM), and Booking Holdings (BKNG).

Steady income and access to remaining assets are key considerations for DC plan sponsors.

Learn how using a “switch” trading strategy can create efficiencies to improve overall execution cost and quality.

Managers are increasingly focusing on sectors beyond tech that could benefit from the rise in AI in the short term. These include healthcare and consumer companies, which also have more attractive valuations.

As long as ETFs stay true to their original mindset of solving investor problems, growth is the only path forward. Current product development suggests that’s the most likely case.

At the Berkshire Hathaway Annual Meeting we marked what we believe is the end of an era both for Berkshire and for the S&P 500 Index.

How momentum and election cycles may shift the impact and timing of seasonal trends.

The latest run of unchecked optimism might just be over.

Another strong quarter in markets led to another stellar performance for the Momentum and Growth factors.

After a strong start to the year, equity investors are assessing whether a range of escalating risks will lead to continued volatility ahead. In this quarter’s Systematic Equity Outlook, we’ll explore macro and micro risks through a systematic lens, and how we’re positioning portfolios to harness alpha opportunities ahead.

The market has been highly tuned to news from the Fed or developments in artificial intelligence technology to set expectations.

Interpreting flows into ETFs and mutual funds sometimes feels an awful lot like reading tea leaves, but I love it.

Why the current momentum trade, despite stretched valuations, could continue.

Over half of Gen Z and Millennials have a side hustle or some kind of gig work to supplement their income. The numbers show that nearly two-thirds of workers are living paycheck to paycheck.

For this edition of Bull vs. Bear, Karrie Gordon and Nick Peters-Golden debate whether alts deserve portfolio allocation in 2024.

As the S&P 500 continues climbing, investors don't need to worry about a sudden drop, which bodes well for high-yielding dividend funds.

For decades, the tech sector wasn’t viewed as a prime source of equity income. But that’s changed for the better in recent years, and that positive evolution is ongoing.

In this paper, GMO proposes a novel approach to financing emerging countries’ transitions toward cleaner energy production.

The shift from a regime of secular stagnation to one of reflation is contributing to both a broadening of global earnings growth and significantly higher dispersion in company results and performance.

22%. That is the average increase in potential retirement spending that individual savers in defined contribution plans can achieve when they embed guaranteed retirement income solutions into a target date fund. For lower-income workers, it’s a 25% increase.

Many investors remain in cash, but we think it’s time to shift exposure to bonds.

This year continues to follow in the footsteps of 2023, marked by increased investor optimism but ongoing uncertainty. For now, much remains unknown, and a higher January inflation print only proves the challenges that still lie ahead.

Secure lifetime income is a top wish-list item for defined contribution plan participants, and it has benefits for plan sponsors too. But there are very different ways to deliver it.

Stephen Dover, Head of Franklin Templeton Institute, recently hosted a discussion with Michael Buchanan, Co-Chief Investment Officer, Western Asset Management, and Brendan Circle, Portfolio Manager, Franklin Income Investors. The group considered the current market environment as it pertains to cash in client portfolios. Has cash reached a tipping point?

Investors experienced a shift in global risk sentiment during Q4, marked by lower inflation and the anticipation of an end to the rate hiking cycle.

Your active managers are more competent than they look.

The fourth quarter of 2023 was a more favorable environment for active managers in the UK, Europe, Emerging Markets, U.S. Small Cap and Listed Infrastructure, while being more challenging for U.S. Large Cap, Global, Global ex-U.S., Japan, Australia, Canada, Long/Short and Global Real Estate managers.

Interest rates in most parts of the world appear to be stabilizing, as inflation trends continue to decline from the high levels seen in the summer of 2022. Learn more about the implications for hedge fund strategies from K2 Advisors.

This dividend aristocrat has increased their dividend for 67 consecutive years. How’s that for reliability? But the best part is it’s finally in the cheap buy range for value investors.

Following a period of relatively calm asset markets from 2013-2019, in which the CBOE Volatility Index (VIX) averaged just below 15, volatility in asset markets has returned¹ and investors have been looking for ways to protect themselves.

In 2023, the Federal budget deficit exceeded private and foreign saving, resulting in only the eighth year since 1929 with negative net national saving (to be referred to as NNNS).

2023 proved to be another year when the consensus views were not correct. A few of these views that turned out non-prescient were that inflation would remain elevated in mid-single digits or higher, higher interest rates would crush housing prices, consumer spending would collapse, and oil prices would continue to rise.

The 60/40 portfolio has long been the foundation of portfolio construction. But over the past two years, this portfolio strategy has broken down. The 60/40 portfolio faces several challenges. To understand what might lie ahead, investors need to assess both recent inflationary forces and historic trends.