News Mentions & Press Releases
Donald Trump’s narrow presidential victory, Brexit and stronger nationalist tendencies in Europe and Asia indicate an underlying shift in the emphasis of consumers and government policy.
While it may continue to cause some volatility, the shift will benefit economic growth through a few key changes in behavior:
- Greater consumer optimism fuels increased consumption
- Expansionary fiscal policies support infrastructure projects
- Regulatory reform increases potential business investment
Economic trends show this transition is already in motion. Research originally conducted by MSCI and updated by CLS separates economic regimes into the four different quadrants seen in the chart below. This chart shows the global economy has moved from the slow-growth quadrant to the heating-up quadrant. The heating-up quadrant is associated with stronger economic growth and increasing inflation.
Investors are snapping up U.S. corporate bonds at a time when the yield available to cushion them from losses is the thinnest in more than two years.
ORANGE COUNTY, Calif., Feb. 15, 2017 /PRNewswire/ — Riskalyze today unveiled a lineup of new products and services aimed at revolutionizing client engagement, portfolio construction and account automation for advisors. In the kickoff keynote at the T3 Advisor Conference, Riskalyze CEO Aaron Klein announced the following new products:
- Riskalyze Premier, a new service tier designed to supercharge client engagement and dramatically increase practice efficiency.
- The Next-Generation Autopilot Platform, a multi-custodial automated account platform that allows any advisor to deliver both deep personalization and scalable automation for all of their client accounts using One-Click Fiduciary™ technology.
- Autopilot Partner Store, a marketplace that puts models, strategies and research from some of the industry’s best asset managers, strategists and research firms just a click away from over 19,000 advisors.
- Risk Number® Models, a series of eight model strategies built from the funds of Riskalyze’s key asset management partners.
In mid-January, the SEC approved Capital Group’s plan to issue clean shares on behalf of its American Funds suite, allowing brokers to set their own commissions on mutual fund shares that have stripped out distribution costs. In a Jan. 6 letter, Capital Group requested relief from Section 22(d) of the…
It is no secret that active management has been increasingly critiqued in recent years, and asset flows are following suit as investors move to passive products.
One of the large recipients of these flows is index-based, quasi-active, smart beta and factor strategies that deliver returns of active managers, but at a fraction of the cost.
Historically, many of these factors have outperformed in nearly all environments – an impressive track record, but one that may be challenged as more assets move into the space.
However, we’ve written extensively on a number of clues as to what factors outperform and when, and what investors can do to give themselves the best chance to outperform going forward. Is there a connection between outperformance of factor investing and active management? Are correlations the answer to both?
International value stocks look cheap. The iShares MSCI EAFE Value (EFV) is attractive compared with other diversified, developed international indexes and ETFs.
Compelling valuations, relative to the MSCI EAFE Growth ETF (EFG), make up the majority of the case for leaning diversified international portfolios toward value. Hopes for improved economic growth and a yield that rewards patience also support a lean toward value. Whatever your allocation to developed international markets, you should tilt the allocation toward value.
The recent short-term rally in global stock markets has boosted optimism towards equity investments.
While always glad to see our clients benefiting from market increases, CLS portfolio managers continue to keep a vigilant eye on market risk. In addition to our Risk Budgeting Methodology, we also regularly identify specific risks of greatest concern. (You can follow our list of key concerns by reading our quarterly CLS Reference Guide or Monthly Perspectives.)
Currently, global debt levels trouble CLS more than any other specific risk. While the risks of the 2008 global financial crisis are in the past, the debt used to help spur the economy past the crisis remains. This post seeks to explore different ways global debt levels might slow stock market returns in 2017. Before exploring the details, keep in mind the previous sentence included the word “might.” While these risks will shape markets in 2017, the most likely outcome is global governments will muddle through and markets will rise.
That’s why Grant Engelbart, portfolio manager at the $7 billion CLS Investments, says he plans to use more alternative funds next year. While he typically allocates as much as 15% of assets to liquid alts, Engelbart stresses the need to scrutinize these funds, since many are highly correlated to the assets people are looking to diversify away from.
That’s borne out by Morningstar research, which will launch a style box for liquid alternatives in 2017. The tool should help investors compare the motley mix of complex funds that fall under the liquid-alternative category, gauge how they fit in with their other investments, and determine if managers have actually delivered on the diversification and smoother ride they promise.
Omaha’s money managers and investing pros expect the Standard & Poor’s 500 to rise about 8 percent this year, boosted in part by tax and regulatory policies expected to be business-friendly.
A World-Herald survey of 10 metro-area portfolio managers and finance experts from academia found an average estimate of 2,425 for the 2017 year-end close of the broad S&P index. That would be about 8 percent higher than the 2016 close of 2,238.83, a year during which the index rose almost 9 percent.
Lower taxes and a lighter regulatory burden were almost universally cited as catalysts for the stock market in 2016; both were major points of emphasis for President-elect Donald Trump. Politics aside — several of the money managers said privately they liked neither Trump nor his opponent, Hillary Clinton — there was widespread agreement that investors will profit from what they described as an increasingly competitive U.S. business climate.
While I don’t have a crystal ball, it’s safe to say the industry will look very different 20 years from now. Below are just a few things to expect:
Asset Classes: Twenty years ago, there were two main asset classes that mattered the most: stocks and bonds. Over the last two decades, there has been an explosion of asset classes, and that will likely continue over the next 20 years. Some will be highly correlated with each other as the markets are sliced into ever-thinner pieces. In addition, new uncorrelated asset classes and factors will emerge because of technology and global trade shifts. Our investment categorization will need to evolve. It is likely that historical patterns of performance will change on a much more rapid scale.