EM Sovereign Debt 2014: Neither Phoenix nor Failure

Emerging-market (EM) sovereign bonds were burned badly in 2013. Will they rise from the ashes in 2014? We believe some will and some won’t. The watchword for 2014 will be selectivity.

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Detroit and Illinois Work Toward Resolving Their Issues

Recent negative news about Detroit’s bankruptcy and Illinois’s pension overhaul has raised fears about the poor financial health of many cities and states. And it’s shaken individual investors’ confidence in municipal bonds. Just how worried should investors be? Not very, in our opinion, as bond defaults remain very rare. In fact, we view recent events [...]

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Will Emerging Stocks Get a Developed-World Lift in 2014?

The failure of emerging economies to piggyback on the rich-world recovery this year is giving investors pause, despite enticing emerging-market (EM) valuations. But investors shouldn’t underestimate the power of this normally symbiotic relationship—or the upside potential in EM stocks next year on even a modest pickup in EM economic activity.

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Companies Can Do More to Unlock Shareholder Value

As the global recession and financial crisis move further back in the rearview mirror, companies have been more proactive about using their balance sheets in ways that enhance shareholder value. But we think they can do a lot more.

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Time to Bench the Equity Benchmark Too?

While fixed-income investors are growing increasingly aware of the risks of benchmark-oriented bond portfolios in a period of rising rates, equity investors have recently also started to question the wisdom of cap-weighted indices. We would go even further and argue that the performance of a cap-weighted benchmark may be irrelevant for the long-term goals of [...]

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How to Invest in Emerging Markets 3.0

It’s been 25 years since the emerging-market equities index was created, and much has changed. Today, we believe that emerging markets are on the cusp of a third phase that might compel investors to shift away from benchmarks and focus on absolute risk.

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Triangulating a Truer Course Through Emerging Markets

Where can you find a car market which will double in size in the next five years? Brazil and Russia might be obvious places to look, but would you have expected Chile, Colombia, Ukraine and Vietnam? Picking the next big themes in emerging consumer markets is even harder than in the well-researched developed world. To [...]

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Quality Can Deliver in Times of Rising Rates

By Chris Marx (pictured) and Kent Hargis As talk of an early Fed “tapering” triggered a sell-off in bonds, safe-haven equities have also suffered. Can low-volatility strategies survive rising rates and an unraveling of the safety trade, in which investors rushed headlong into safe assets no matter the cost? We say, yes—but you’ll need an [...]

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Managing Equity Risk: Some Rules for the Road

Under the surface of May’s strong equity returns were major shifts in sector leadership, notably a rotation from defensive to traditional cyclical sectors. Given the market’s tendency to change gears, it helps to be flexible in managing portfolio risk. In fact, it should be a daily exercise.

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Sector Distortions Can Be Costly in Passive Investing

Joseph G. Paul (pictured) and Kevin Simms Passive investing strategies that emulate an index have become increasingly popular. But passive investing can go awry when sector concentrations leave investors exposed to unintended risks.

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