It’s a Great Time to Be an Active Manager

One prominent asset manager says that dominated of today’s market by passive funds and quantitative strategies is creating opportunities for his actively managed funds. This according to an article inInstitutional Investor. Warrren Koontz, head of value equity for Jennison Associates (the $176 billion fundamental fixed income and equity manager for PGIM), said, “There’s no better time to be an active manager than now—and it’s even more dramatic in the value space.” He explained that his… Read More

Ray Dalio on Unpredictability of Markets

The recent news that Bridgewater Associates’ flagship fund—the Pure Alpha fund—lost 4.9% in the first half of this year should underscore the unpredictability of markets, according to a recent article inBloomberg. The article cites the performance of the SPDR SSgA Global Allocation ETF, which tracks the broader markets and was up 12% for the year (as of July 19th). The article notes two takeaways: ·      “The globalization of the world economy in recent years means that… Read More

Stock Rally Causing Look-Alike Portfolios

A study by Bank of America Merrill Lynch found an overlap in the top 50 stock holdings among mutual funds and hedge funds. This according to an article inThe Wall Street Journal. Citing Bernstein data, the article reports that the most crowded trades included Amazon, Microsoft, Mastercard, Abbott Laboratories and PayPal. “Investors are drawn to stocks that have performed well and risen fast,” the article reports. At the same time, it adds, “few are willing… Read More

The Gains and Losses Associated with Locking Up Money

In a recent article for The Wall Street Journal, columnist Jason Zweig discusses the pros and cons of a newly proposed fund called the “Forever Fund” in which investors would lock up money for at least 10 years. The fund idea—still only a “thought experiment”–was created by Cambria Investment Management executive Meb Faber who, writes Zweig, wants investors to take a longer-term view “in a world of itchy-fingered traders.” “While I’m a fan of the… Read More

Black Rock Money Manager on the Retirement Crisis and Climate Change

In a recent Barron’s, Mark Wiseman, head of BlackRock’s equities group, made a strong case for long-term investing and offered solutions to short-termism and the retirement crisis in the U.S. Here are some highlights from the interview: Active investing is “far from” dead, Wiseman argued: “I don’t think passive investing exists. The decision to buy an index, and which index, is an active decision.” Instead, he explains, it’s about your investment approach. “You can have… Read More

Tips for Reading Financial News

The first in a series of CFA Institute articles on how to read financial news addresses the issue of consensus, noting how the expectations behind it form a “logical starting point for putting any financial news in the proper context.” The article presents the following framework for interpreting financial news: The article offers a list of things to look for in financial news: Story Selection: Editorial choices such as placement of the story and depth… Read More

Small-Cap Troubles Signal Economic Worry

Small company stocks have been hit hard this year, and “investors are beginning to wonder if that is a taste of what is to come with the wider market.” This according to a recent article in The Wall Street Journal. The divergence in performance between small- and large-cap stocks is raising flags for some, the article reports, adding that small-caps—which derive more revenue from domestic businesses—”typically rise ahead of a wider market rally and fall… Read More

Hulbert: A New Approach to Momentum Investing

New research has shown that a more effective way to profit from the momentum effect is to buy the “hottest” factors rather than the best-performing stocks. This according to a Wall Street Journal article by Mark Hulbert, founder of Hulbert Financial Digest. Researchers found that stocks held in a high-momentum portfolio tend to share the same “factors” and that the “real momentum effect actually takes place at the level of these factors rather than individual… Read More

10 Characteristics of Top-Performing Investment Teams

A recent article in CFA Institute outlines the findings of a research project by Focus Consulting Group intended to identify the common attributes of high-performing investment teams. The study—which consisted of surveying 96 individuals from 10 top investment teams (rated based on ten-year performance records) –found the following ten common attributes: Disciplined process: The top teams have buy/size/sell process disciplines as well as “clarity and acceptance of decision rights: Everyone knows who makes the final… Read More

It’s Time to Protect Stock Profits, Says $338 Billion Manager

Deutsche Bank Wealth Management ($338 billion AUM) has cut equities from 50% to about 40% of its portfolio and expects that trend to gain momentum in the second half of the year. This according to an article inBloomberg. The article reports that the firm first became cautious at the end of April, saying “markets had risen, companies’ earnings outlooks were doubtful and the U.S. China trade war wouldn’t be solved in 2019,” adding, “It turned… Read More