For long-term investors, the growth versus value debate had historically leaned toward value as the preferred style. The calculus was simple: by putting their money in stocks considered to be trading below their intrinsic value, investors should be rewarded with higher returns. Value stocks, traditionally found in industrials, energy, financials and other economic mainstay sectors, historically outperformed or lived up to their value premium.
U.S. stock market performance, as measured by the S&P 500, the market capitalization weighted index of the largest 500 domestic stocks, has been driven by a small number of stocks over the past few years. The top five holdings now represent 21.9% of the S&P 500 as of December 31, 2020—the most concentrated the market has been since the 1970s during the “nifty fifty”. It is also striking that each of the top five holdings share a common theme: technology and e-commerce.
The 2008 financial crisis spurred central banks around the world to act aggressively by lowering policy rates close to zero and buying fixed income securities in the market, often referred to as quantitative easing. Post-recession some countries and regions were more affected than others, such as the European Union (EU) and Japan which have recovered at a slower rate than the U.S.
Over the past decade, we have witnessed a broad shift in the riskiness of the corporate debt market. Companies have capitalized on a low interest rate environment, driven by global central bank stimulus, and issued elevated amounts of lower rated securities.
The U.S. Treasury yield curve has attracted a lot of attention this year as interest rates have risen. In this analysis, we outline several factors pushing the yield curve higher, as well as the offsetting forces keeping it from moving more than it already has.
One of the most discussed topics in the investment world these days is bitcoin. Read our commentary to understand what cryptocurrencies are, their potential for disrupting the existing financial exchange system, and their viability for use in a diversified, institutional portfolio of assets.
Interest in emerging markets continues to gain traction among investors – and for good reason. Read our Investment Insights commentary to understand why we encourage our clients to consider emerging markets as part of their investment portfolios.
French presidential elections concluded recently, with En Marche! candidate Emmanuel Macron soundly defeating the populist National Front party candidate Marine Le Pen. Read our Investment Insights commentary for our takeaways.