The Active Management Channel

Hotchkis & Wiley: Exploiting the Inefficiencies in Small-Cap Stocks

Judd Peters is a portfolio manager of the Hotchkis & Wiley Small Cap Diversified Value Fund (HWVIX). Since its inception, the fund’s annualized return has been 9.45%, resulting in a 254 basis point outperformance versus Russell 2000 Value Index. The fund is rated five stars by Morningstar. I interviewed Judd last week.

Building a Better U.S. Economy

This shouldn’t surprise anyone, but public trust in the federal government is eroding. Sixty years ago, 75 percent of Americans expressed faith in the government to do the right thing “most of the time” or “just about always.” Seventy-five percent! You can’t get 75 percent of people to agree on anything now, as the recent “Laurel or Yanny” video proved.

Equity-Sector Leadership Can Shift Amid Rising Interest Rates

In an environment in which interest rates have been steadily rising — the 10-year US Treasury yield has moved up almost 75 basis points since its recent low in September 2017 — one question that investors face is the potential effect of this phenomenon on equity sectors. Which sectors might be winners or losers in a rising rate environment?

Food for Thought: Integrating vs. Mixing

Although a naïve comparison appears to favor the integrating approach to multi-factor strategy construction, after taking into account both quantitative and qualitative considerations, many investors—those seeking transparency, diversification, minimal governance oversight, and low fees—may find mixing is a more sensible choice.

The Madness of Crowding Out

Public debt may be growing at the expense of private debt, the Chinese bond market is opening up, and important dates for tariffs are fast approaching.

The Fundamentals of RAE: Seeking Value Beyond Borders

It may be time for U.S. investors to challenge their home-country equity biases.

The Holy Grail Investment Formula: Better Returns with Less Risk

What would you do if I handed you a map to the Holy Grail of investing? Would you toss it in the trash because Nobel Laureate economists say it’s impossible to beat the market with less risk? Or would you give it a thorough read to see if there is any validity? Let’s find out.

When Clients Spend Themselves into Oblivion

What do you do when one of your best clients is spending their way into oblivion?

How to Fire a Client

The decision to "fire" a client is painfully difficult. Many planners are reluctant to disengage with difficult clients due to a sense of responsibility. If you are contemplating firing some of your clients, the following steps will ease the break-up and ensure a minimum of follow-on damages.

S&P 500 ETFs

The S&P 500 index is arguably the most well-known worldwide. It is based on the market cap of the 500 largest companies in the U.S. The first-ever ETF, introduced in 1989, hoped to mimic the index, but was short-lived due to a lawsuit. Several S&P 500 ETFs have been brought to market since, and we show their performance, as well as the tracking error relative to the S&P 500 Total Return Index (which assumes reinvestment of dividends).

World Markets Update

Six of eight indexes on our world watch list have posted gains through Monday, May 21, 2018. The top performer this year is France's CAC 40 with a gain of 6.12%. In second is Hong Kong's Hang Seng with a gain of 4.40%. In third is India's BSE SENSEX with a gain of 2.38%. Coming in last is Shanghai's SSE with a loss of 2.82%.

 

A Strategic Income Fund that is Thriving in a Challenging Bond Market

Carl Kaufman is the co-president, co-chief executive officer and managing director, fixed income at Osterweis Capital Management. He is the lead portfolio manager for the Strategic Income Fund. That fund has had an annualized return of 6.18% since its inception on 8/30/02. Its performance exceeded the AGG by 278 basis points. I interviewed Carl last week.

The Future for Factor Investing May Be Different Than its Backtested Past

Data mining is a huge risk with factor-based investment strategies. Many factors have proven to not work in practice. Even the most popular factors, like value and momentum, may prove less effective going forward.

Weighing the Week Ahead: Will Higher Interest Rates Lead to Lower Stock Prices?

The economic calendar is light, and the market week will be shortened. There is no holiday this week, but expect many participants to take off early for a long weekend. If interest remain above 3% on the ten-year note, that will be the focus.

Value in Short Bonds: ‘We’re Not in Kansas Anymore’

For years after the financial crisis, many investors were resigned to earning next to nothing on their cash and short duration investments. Rising interest rates, however, have brought a new reality: The front end of the fixed income market looks attractive for the first time in almost a decade.