While the end of 2018 may have been rocky for financial markets, our value team is excited about their prospects in 2019. In this quarter’s update, Sr. Portfolio Manager Mike Liss discusses where his team is looking for good risk/rewards for client portfolios, and what continues to worry him heading into 2019.
Optimism In Value Investing In 2019?
Seth Klarman: Investors Always Need A Strategy To Guide Them
"Many investors lack a strategy that equips them to deal with a rise in volatility and declining markets," Seth Klarman told his audience in a speech at MIT in 2012. Q3 2020 hedge fund letters, conferences and more Klarman was talking about the benefits of having a strategy, such as value investing, to provide a Read More
ETF Portfolio Construction Amid Changing Market Conditions
Moving forward into 2019, Portfolio Manager Rene Casis sees three themes shaping the markets: inflationary concerns, rising interest rates, and increased volatility. What does that mean? Advisors will need to be more thoughtful about the portfolio construction process behind exchange-traded funds, or ETFs.
Emerging Markets Equity: Are We In for a Rebound?
2018 challenged emerging markets (EM). Political uncertainty, trade wars and central bank policies caused the markets to price in no growth for EM. Despite these difficulties, Patricia Ribeiro and the Emerging Markets team think 2019 will be a positive year for EM. Get her take on the opportunities and challenges ahead in this 2019 outlook.
Investing in 2019: Finding Signals within the Noise
How Would Slower Growth Affect Market Returns in 2019?
Market expectations are low coming out of 2018, driven by three major fears. In his latest quarterly update, Sr. Portfolio Manager Brent Puff explains these fears and their potential implications for global growth markets in 2019.
Global Growth in 2019: All Eyes are on the Fed
Brexit and trade negotiations with China were big topics at the end of 2018, and we think we’ll see some resolutions in 2019. But in fixed income markets, all eyes are on the Federal Reserve and what they might do in the year ahead. Co-Chief Investment Officer John Lovito explains the great debate, and what he thinks is likely to happen.
Will REITs shine in 2019?
Investors have been spoiled with the last few years, enjoying strong market performance. But if market growth rates were to slow to single digits in 2019, Sr. Portfolio Manager Steve Brown believes REITs and their dividends could become more attractive. Find out where he sees opportunities and risks in this quarter's update.
Finding Growth Opportunities in an Uncertain Economic Cycle
The return of volatility in 2018 has many investors questioning where we are in the economic cycle. Some think markets have peaked, while others believe there’s room for markets to accelerate. In his latest quarterly update, Portfolio Manager Jeff Bourke describes how our growth teams are navigating this uncertain environment to find compelling long-term growth opportunities.
Navigating the Late Credit Cycle: Fixed Income 2019
Volatility makes many investors nervous, but Fixed Income Sr. Portfolio Manager Kevin Akioka sees opportunity amid changing market conditions. This quarter he shares how rising rates will impact the credit market and why he’s optimistic about certain credit sectors.
We're very excited about 2019. We see some very good research awards for our clients in energy and in financials.
Ended 2000 18 was a pretty rocky lot of things were weighing on the market quite a bit of it. Those over into the beginning of 2019 the trade war with China that's going to be hanging over heads for quite a while. We don't know what's going to happen over the 90 90 day period that it was agreed to to continue to negotiate before the next round of tariffs will be put in place. We think the energy markets will balance out OPEC has decided to pull about one point two million barrels of production off the market. Inflation has slowed down the rate of acceleration inflation really slow down towards the back half of 2018.
It hasn't stopped. Still around 2 percent. And you've got a tight labor market as well. As far as the debate value versus growth values started to outperform growth in the fourth quarter. But from our perspective the more expensive parts of the value market are the ones that have really outperformed being utilities consumer staples and real estate investment trusts. And for our strategy at the moment we don't view those as being good risk rewards for our clients because they are on the more expensive side. We see the best records for our clients in energy and in financials and in particular within the financials with the banks and capital markets. What worries me most is a recession instead of just this global slowdown which is what we think that's our base case. Instead it turns into something worse and the tariffs. End up being fully implemented and the companies just pull back on investing and so causing a recession. The reason we don't foresee a recession at least in the immediate future.
Is because the financial conditions that we saw in the last last two recessions we don't see the same level of excesses. We're pretty optimistic on energy. We think that the moves from OPEC to rebalance the market will have a positive effect. We think that that investment will continue and will help our energy services companies and we think that the behaviour of the exploration and production companies that we own have started to change in a major way. Instead of focusing on growth at all costs they're starting to focus on returns on capital which means that they are starting to actually return cash to shareholders. We're pretty optimistic on the banks as well. We think that they have changed themselves and transform transform themselves over the last decade. They have much more capital relative to 10 years ago. We think that they engaged in a lot of reckless behavior and a lot of bad lending towards the end of the last cycle. We do not think that they've gone to that length of that extreme. This time we think to have very solid return prospects because we think that they can grow their loan book 1 to 3 percent depending on the bank they pay dividend yields now that are up around 3 percent continue to increase those dividends. And we think they can get a little operating leverage in their income statement.