Entries filed under 'Active Management'

    Three Trends That Defined 2016

    November 28, 2016 9:38 AM by Giulio Martini

    Here’s a look at key factors that have influenced economies and markets in the current year—and their investment implications for 2017. 

    As the current year winds down, we thought this would be a good opportunity to review three key trends that have affected economies and markets in 2016—and what their implications may be for investors in 2017. 

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    2017: For U.S. Equities, Time to Get Small, Cyclical, and Active

    November 21, 2016 3:50 PM by Brian Foerster

    Economically sensitive sectors should lead the market higher, while small- and mid-cap stocks are finally poised to outpace mega-caps.

    Elections have consequences, and that has been profoundly true this past year. The United Kingdom’s referendum vote in June to leave the European Union (“Brexit”) recalibrated global growth expectations as a result of potentially slower growth in the United Kingdom. Its impact won’t be known until Article 50 of the Lisbon treaty (which sets out how an EU member might voluntarily leave the union) is invoked in 2017, ushering in a host of risks around trade, economic growth, and the political effects on the EU. 

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    Finding Opportunity—and Managing Risk—Amid International Volatility

    February 3, 2016 4:00 PM by Vincent McBride

    For all the turmoil in international equity markets this year, there are a number of positives.

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    Given the volatility we’ve seen in international equity markets since the start of the year, investors are now asking, “What’s next?” 

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    Finding Value in Volatility: Companies Where M&A is a Core Competency

    November 23, 2015 12:17 PM by Lord Abbett Editorial Staff

    Unlike past cycles, the market is rewarding companies with proven deal making skills.

    (Third of a three-part series)

    In managing small cap, smid cap and micro cap value strategies, Lord Abbett partners and portfolio managers Justin Maurer and Tom Maher continue to focus on U.S.-centric companies that have financial and capital management flexibility to compete strategically. Along those lines, mergers and acquisitions (M&A) have been a significant investment theme—both in terms of potential buyers and sellers. 

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    Finding Value in Volatility: Gauging When Your Stocks Have Hit Bottom

    November 17, 2015 12:35 PM by Lord Abbett Editorial Staff

    Here's how Lord Abbett portfolio managers have scoped out opportunities in a market rife with rich valuations, earnings misses, commodity deflation, and sector sell-offs.

    (Second in a three-part series)

    Has this year of volatility generated more value opportunities than the past?

    “It’s almost been like a ball rolling down a hill,” said Lord Abbett Partner and Portfolio Manager Justin Maurer, who along with Lord Abbett Partner Tom Maher manages the firm’s value equity strategies.  

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    Shelter from the Storm

    October 2, 2015 1:25 PM by Lord Abbett Editorial Staff

    When high fliers hit turbulence, stable-growth stocks, such as best-of-breed homebuilders and a home-improvement products retailer, gain favor, especially in a promising housing recovery.

    In light of the recent equity-market pullback, some portfolio managers have taken a series of steps to help mitigate volatility.

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    Volatility, Fear, and the Benefits of Stock Picking

    September 14, 2015 3:57 PM by Joseph M. Graham, CFA

    Active management can add value during periods of high volatility and intra-market correlation.

    “Turmoil” and “fear” are popular words these days. You can go to Google Trends and see how much these words are surging in Internet searches. “Turmoil” has even morphed into a verb, as in “The market is turmoiling again due to hawkish overtones from strong jobs data.” As with much of etymology, there’s some truth hidden in the newly popular form. But it may not be the truth people imagine, that formerly rare bouts of volatility have now become commonplace.

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    Equities: An Approach that Never Goes "Out of Style"

    July 24, 2015 1:50 PM by Joseph M. Graham, CFA

    New research reveals that style inconsistency leads to underperformance, echoing the findings on active share.

    The papers on active share by Martijn Cremers and Antti Petajisto1 have received a lot of attention in the industry, and here at Lord Abbett (see here, here, and here)—and for good reason.  Active share, when used in combination with tracking error, enabled the identification of a class of mutual fund managers that, on average, have outperformed their benchmarks. Cremers and Petajisto called this group “Diversified Stock Pickers.”

    But Cremers and Petajisto aren’t the only researchers to discover the phenomenon that has enabled this group to outperform. 

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    Can Institutional Investors Learn from Yale's Patient Approach?

    May 13, 2015 2:55 PM by Charles F. Hofer, CFA

    New active share research—and Yale's successful record with domestic and international equities—suggest that patience is rewarded.

    Yale's endowment fund has received much attention for an approach to asset management that has proven highly successful during the past 20 years. Over this period, the endowment has posted returns averaging 13.9%, according to the endowment's latest annual report. Much of the success has been attributed to chief investment officer David Swenson's preference for illiquid alternative investments, such as timberland and private equity. [Of course, alternative investments are not without risks. These can include: investment risk, liquidity risk, operational risk, and organizational risk. And, as with all investments, past performance is not a guarantee of future results.]

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    Yale Favors Active Management and Stock Picking

    May 6, 2015 3:40 PM by Lord Abbett Editorial Staff

    Top-ranked endowment prefers firms with “exceptional bottom-up fundamental research capabilities."

    Since the publishing of Pioneering Portfolio Management in 2000, hundreds of colleges have sought to follow in the footsteps of David Swenson, the chief investment officer of Yale University’s endowment. In the book, Swenson laid out the details of a strategy that enabled the university to achieve enviable returns for more than 20 years. The strategy, which became known as the Yale Model, puts a heavy emphasis on alternative investments such as private equity, natural resources, and real estate.

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