Active Management

Investors need to understand the differences between Chinese capitalism and Western capitalism in order to properly assess the opportunities in China. Meanwhile, norms in India more closely resemble those in the United States— but India has dramatically larger headroom for growth.

Robust engagement with company management can be key in sparking catalysts that unlock shareholder value and potentially lead to better returns over the longer term, according to Franklin Mutual Series Environmental, Social and Governance (ESG) Ambassador Tim Rankin.

Gold’s average daily trading volume for the one-year period was $183 billion, compared to the S&P 500 with nearly $235 billion. That dollar amount is enough to beat currency swaps as well as all government and corporate debt.

We’re upgrading the Staples sector, but only incrementally. Here’s why.

The country’s leadership has designed a new development model, based on a ‘common prosperity’ philosophy, aimed at modernising the economy by improving the country’s future demographic profile via lowering inequality and promoting sustainable, even if slower, GDP growth which is both less dependent on financial leverage and in harmony with nature.

U.S. stocks fell Tuesday on persistent concerns over the debt ceiling, along with a continued increase in Treasury yields. The S&P 500 closed down 2%, the Nasdaq fell 2.8%, and the Russell 2000 fell 2.3%.

We have become famous (or infamous) regarding our views that there is a bubble in long-duration assets. In this report, we investigate what’s causing such widespread bubbles, their potential effects on the overall economy, and the interesting investment opportunities resulting from the bubble’s misallocation of capital.

Executive pay is a powerful motivating factor. But investors need to consider whether executive pay incentives are fully aligned with the goals of the business. We find that companies with meaningful ESG goals embedded in their executive compensation schemes tend to have a better understanding of the ESG factors that are material to their business, use specific key performance indicators (KPIs) and are more likely to achieve them.

As the globe enters the waning months of 2021, concerns over inflation, the delta variant of COVID-19 and the unwinding of easy-money policies loom large for markets. Despite this, we believe that the business cycle is still in a recovery phase, although it’s maturing. We expect more cyclical upside for economic growth outside the U.S. in the months ahead, allowing market leadership to rotate toward the rest of the world.

The recent issues with China Evergrande Group have raised concerns over the broader health of China’s real estate market, the potential risk to its financial system and, more broadly, whether this could trigger a global financial problem. In our latest Q&A, Portfolio Manager Teresa Kong, CFA and Investment Strategist Andy Rothman provide their views and insights.

Emerging markets have evolved over the last few decades. Today, Asia is the core of growth, rising consumption and innovation within emerging markets, and world class industry leaders in innovation have changed the game of investing.

The value rebound that started in September 2020 gave up nearly half its gains by mid-May 2021 as the recovery faltered with the onslaught of the highly contagious Delta variant. But vaccination has proven highly effective, and as the unvaccinated around the world become vaccinated, the prospect of a reinvigorated economy is good. Is now a second chance to rebalance into value stocks?

India’s second COVID wave subsided in June and continues to remain at the lower level and Indian equities were a bright spot for the region, significantly outperforming Asia and broader emerging markets in August.

We have a relatively sanguine view on the likelihood of inflation becoming ingrained in the system (much as it pains us to agree with the Fed). However, the dark arts of macroeconomics are notoriously tricky, and we have often talked of the need to build robust (as opposed to optimal) portfolios – effectively, portfolios that can withstand multiple outcomes.

It's been a good year for U.S. stocks, but is the run nearing an end?

The active/passive debate frequently focuses on equities, where active approaches have historically underperformed passive strategies. The story is decidedly different in the world of fixed income, where active managers can more easily exploit mispricing and other inefficiencies.

Among the most persistent questions I hear is why we don’t just adapt to the reality that the Federal Reserve will never again “allow” the market to experience a serious decline. The problem with this view is that it rests on the premise that Federal Reserve policy supports the market in a clear-cut and mechanical way, when its effectiveness actually relies on the speculative psychology of investors.

Value has its day in the sun. But are investors learning the right lessons from it?

Social Security is in worse shape than we thought. The program’s Old-Age and Survivors Insurance (OASI) Trust Fund is now expected to be insolvent by 2033, a year earlier than anticipated.

Uncertainty always exists in financial markets.

Special purpose acquisition companies (SPACs)—also known as blank-check companies—have gained immense popularity among investors since the beginning of 2020, despite being around for decades.

Social Security is in worse shape than we thought. The program’s trust fund is now expected to be insolvent by 2033, a year earlier than anticipated. According to the annual report, its finances have been “significantly affected” by the pandemic and 2020 recession, not to mention “rapid population aging.”

Mark Mobius, the legendary emerging markets investor, says that 10% of investors’ portfolios should be in gold in anticipation of currency devaluation as a result of unprecedented stimulus measures.

After several strong quarters for value stocks, the last few months have seen a sharp reversal in favor of growth.

Defensive stocks are often misunderstood. In recent years, even when they have delivered strong and steady earnings, returns have disappointed.

The country sits atop what could be one of the world’s largest reserves of various metals and minerals, including not just gold but also platinum, silver, copper, iron, aluminum and uranium. It’s believed to have so much lithium, an increasingly important metal that’s widely used in battery technology, that Afghanistan could one day be known as the “Saudi Arabia of lithium,” according to a 2010 memo by the U.S. Department of Defense.

P is for aligning products to meet each client’s unique goals, circumstances and preferences.

During a trying time for the world in 1939, Winston Churchill famously described the largest country in the world and soon-to-be second superpower, the Soviet Union, as “a riddle wrapped in a mystery inside an enigma.”

The stock market could use some mouthwash.

Emerging-market (EM) stocks have hit a rough patch, but shares of smaller companies have held up well.

This year’s annual economic policy symposium in Jackson Hole opens the six months that will likely define the legacy of the Powell Fed’s first term.

In the summer of 2020, we didn’t know quite a few things about how Americans would react when they got their social and entertainment choices back.

One theme we have focused on in these letters over the past three years is what a transition into a regime of negative real interest rates looks and feels like, and the long-term consequences such a regime brings for the markets, and for investors.