Eurozone Distress: In Case of Emergency Break Glass
Another outbreak of Eurozone distress is not our base case, but more risk-averse investors should understand their options.
Equities
US Buybacks: Don’t Sweat the Slowdown
Slowing buyback activity is a sure sign it’s getting late in the current market cycle, but we expect buybacks to continue fueling the market for now.
Is the Recent Concentration of US Equity Performance in a Small Number of Stocks a Cause for Concern?
Not in our opinion. Recent market leadership by the so-called FAAMG stocks is not extraordinary relative to history, and their valuations and fundamentals, combined with this year’s relatively healthy market breadth, mean that they don’t necessarily present an outsized threat at this time.
US Manager Universe Statistics: Second Quarter 2017
This chart book presents representative long-only and hedge fund manager performance for second quarter 2017. The median Global ex US Small-Cap manager posted the highest return for the quarter (8.9%), while the median Emerging and Frontier Markets manager posted the highest return for the trailing one-year period (24.0%). The median Cash Management manager posted the lowest return for the quarter (0.3%); for the trailing one-year period, the median Global ex US Bonds manager posted the lowest return (-0.6%).
Will the Nascent Shift in Equity Market Leadership from US to Non-US Equities Persist?
Extreme relative valuations suggest that over the long term, US equities should underperform from a starting point of today and that even in a downturn, relative underperformance of non-US equities would be mitigated by their more attractive starting valuations.
Review of Market Performance: Fiscal Year 2017
Equity markets outperformed other asset classes, while monetary policy expectations continued to negatively impact bond markets during the fiscal year ending June 30, 2017. This brief chart book looks at returns and other market metrics for fiscal year 2017.
Investment Publications Highlights: June 2017
June’s publication summarizes three articles on the predictability of equity returns. The first discusses the interaction of buybacks and dividends in the cyclically adjusted total yield metric; the second considers whether profitability metrics can signal periods of outperformance; and the third reviews the usefulness of 16 different variables in timing markets.
Is the Recent Trend of Active Equity Manager Underperformance Due to “Smart Beta” Investments?
No. Both the asset level of the alternative beta universe and the trading volume associated with smart beta exchange-traded funds (ETFs) are still much too small to meaningfully impact most active managers.
Japanese Equities: Short-Term Promise Jeopardized by Longer-Term Risks
We remain neutral on Japanese stocks despite attractive valuations and near-term earnings potential in view of daunting intermediate-term macro challenges.
Assessing the Track Records of “Predictive” Indicators
How much faith can investors put in the signs given by various “predictive” indicators? In this brief, we look at five indicators that have been in vogue in recent years, and review their track record.