Equity Investments

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Weekend Reads for Investors: “The Most Crowded Trade”

Weekend Reads for Investors: The Most Crowded Trade

The economic backdrop figures prominently in the chatter among investment strategists of late as they debate the sustainability of the “decoupling” of the US economy from sluggishness in the rest of the world. Bank of America Merrill Lynch strategists have called the decoupling trade — long US stocks and the dollar — “the most crowded trade in the world.” As US stocks hover near all-time highs, those with a contrarian bent may be receptive to the latest missive from Joe Calhoun. In “Is It Time to Zig?” he suggests investors might want to look outside of the United States for opportunities. Read more

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13F Watch: In Defense of Active Share

13F Watch: In Defense of Active Share

The poor performance of active management has been well chronicled of late but the active fund management industry is not going down without a fight. Apologists have been quick to point to artificially low interest rates as one factor dragging down the collective returns of stock pickers. Index huggers — those managers with low tracking error funds and almost no hope of outperforming their benchmark after fees — are also to blame. In response, active managers are pointing to their “active share” — a measure of how much a portfolio’s holdings differ from those of its benchmark — and research that suggests funds with the highest active share do indeed beat their benchmarks. A review of just-filed quarterly 13F reports reveals that some of the most prominent fund managers truly embrace their role as active portfolio managers. Read more

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