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Emerging Markets Outlook for 2017

The past 12 months have been fairly turbulent in emerging markets, but a number of factors support emerging market performance.  Read More (PDF)

Brave New World or More of the Same?

In this paper we provide broader context around the recent drivers of the global economy and capital markets, and discuss what we see as the themes moving forward. Read More (PDF)

Long-Term Focus with an Eye on Washington

Jim Golan, CFA, Partner

As bottom-up, fundamental investors focused on the long-term—three to five years—we tend not to position the portfolio around macro events. At the same time, given the potential for meaningful policy changes under the new U.S. administration, we believe it is important as investors to keep an eye on what is coming out of Washington as it relates to trade, regulation, and taxes.

Consumer-Driven Opportunities in Emerging Markets

Jack Murphy, CFA, Partner

Despite many near-term concerns for emerging markets arising since the U.S. election, there are reasons to be optimistic about their long-term prospects—in part due to consumers, who continue to offer structural growth opportunities.

A TV in Every Home!

Olga Bitel

U.S. income inequality has increased significantly since the 1970s after several decades of stability, and there are consequences, including a rise in populism.

Helicopter Money

Brian Singer, CFA, Partner

As we approach the eighth year of a bull market, many investors are wondering whether central banks have any tools left with which to intervene should we enter another global recession. The answer is no, they don’t have much ammunition left, which is why we’re hearing more about fiscal policy—and part of that fiscal expansion could come in the form of “helicopter money.”

Should the Markets Be Optimistic About Oil?

William Blair News

Brian Singer, head of William Blair’s Dynamic Allocation Strategies team, discussed the key factors driving steady oil prices, whether prices will rise, and if the markets should remain optimistic in a Wall Street Journal “Moneybeat” podcast.

Navigating the Asia Game Theater

Aaron Balsam, CFA

In the Why stage of our investment process, to understand the influences outside of fundamentals that impact prices of markets and currencies in the short- to medium-term, we borrow from game theory to help us get as much understanding of geopolitical situations into our investment decisions as possible. A long-standing, multi-player negotiation across both trade and security involves Asian countries as well as the United States. These negotiations have become intense enough for us to formally construct a game theater focused on Asia.

Navigating Populism-Driven Risk

Thomas Clarke, Partner

Populism was one of the biggest market influences in 2016, with Brexit and Donald Trump’s election front and center. As we’ve talked about for several years now, populism is a macro theme that affects a number of countries, with broad market and currency implications.

Does ESG Matter?

Blake Pontius, CFA

Research into the efficacy of environmental, social, and governance (ESG) factors has expanded in recent years, and this growth has naturally fueled further debate about the merits of sustainable investment from a performance perspective.

Forest Fires (and the Trump Election) Reduce Tail Risks

Edouard Senechal, CFA, FRM

Up until the late 1960s forest fires were generally believed to be detrimental for forests and management policies were aimed at suppressing fires as quickly as possible. However, an unintended consequence of these policies was that the fires that did take hold were larger and more destructive. Indeed, without the healthy burn of an occasional […]

The Impact of Inflation

Olga Bitel

Previously, I explained that the inflation we are currently seeing in the U.S. economy is not hyperinflation that many of you may have been thinking about; it is benign, long overdue, and cyclical. But it will most certainly affect the financial markets.

Argentina Back with a Vengeance

William Blair News

In an interview with Citywire Selector, Todd McClone, portfolio manager on William Blair’s emerging market strategies, explained why emerging market investors should take a close look at Argentina, noting recent changes in the country’s government and policies.

Trade Wars: Is Trump Bluffing?

Brian Singer, CFA, Partner

Among the morsels of information the market needs to digest in 2017 are the impact of a Donald Trump presidency on U.S. trade policy, and what Brexit could mean to free trade in Europe.

Rise of Populism: Peak Globalization?

Olga Bitel

When thinking about recent attacks on the status quo, such as Brexit and Donald Trump’s election, it’s important to understand the continuum of globalization—how it has moved over the years, where we are now, and what it means going forward.

Our Outlook on Oil Prices

Brian Singer, CFA, Partner

Commodities are not an asset for which one can derive a fundamental value, but rather are driven by supply and demand forces. As such, we don’t transact directly in commodities, such as oil, but we do operate in commodity-sensitive sectors and currencies. For this reason, the outlook for oil (and other commodities) is important to us.

Why We're Starting to Re-Risk

Thomas Clarke, Partner

As several global investment opportunities get more interesting and key headwinds continue to dissipate, we’ve gradually been increasing risk in the portfolio. And in some cases, we’re going against the market’s conventional wisdom.

Immigration: The Final Frontier of Globalization

Olga Bitel

The recent rise in populism, which represents a substantial departure from nearly seven decades of globalization, is a key near- and medium-term risk to any outlook.

Fed No Longer Controls Rates

Brian Singer, CFA, Partner

It’s hard to say that the Fed is actually in control of interest rates. Ultimately, they have ceded a lot of control to the market, and market participants are dictating monetary policy.

Asian Developments Drive Currency De-Risking

Thomas Clarke, Partner

Two developments in Asia have caused us to recently change our currency strategy, and both fell outside of fundamental valuation considerations.

Higher Inflation: Which Sectors Benefit?

Simon Fennell, Partner

In a series of recent posts, my colleague Olga Bitel and I have provided broader context around the recent drivers of the global economy and capital markets, and discuss what we see as the themes moving forward.

What's the Biggest Macro Risk Facing Investors?

William Blair News

The threat posed by global populism is the biggest macro risk facing investors—even greater than global growth stalling—Tom Clarke, co-portfolio manager on William Blair’s Dynamic Allocation Strategies team, recently told Citywire Selector.

2017 Ideas for Fundamental Investors

Ken McAtamney, Partner

The outlook for central bank policy has continued to significantly influence market sentiment, and we expect a number of recent macroeconomic and market trends to persist in 2017, affecting our investment decisions.

Will Trump Rhetoric Trump Sustainable Investing?

Blake Pontius, CFA

Interest in sustainable investing is expanding at a rapid pace among institutional and retail investors around the world, but Donald Trump’s climate-change rhetoric has left some investors concerned about the implications of his presidency.

Why We Focus on Currencies

Brian Singer, CFA, Partner

When I began managing multi-asset investments in 1990, I believed fundamental valuation was the way to create superior performance. Today, I believe that fundamental valuation is necessary, but no longer sufficient. We have to navigate the path that prices take on their way to fundamental value.

Small Caps: Finding Growth in a Low-Growth Environment

Matt McLaughlin, CFA, CAIA

The prospect of subdued economic growth for the foreseeable future has many investors looking for areas of the market where they can find pockets of growth in a low-growth environment. While many businesses are constrained to grow close to the rate of the overall economy, there are multiple ways small companies are unique and can grow much faster than the overall economy.

Inflation Accelerating

Olga Bitel

If 2016 can be summed up as stable growth and rising prices, as I explained previously, what does that mean as we look forward? With recent changes in governments on both sides of the Atlantic, inflation in the near term is more likely to accelerate.

Populist Ground Swell Surges

Thomas Clarke, Partner

We often talk about the ground swell of populism that has taken hold in many parts of the developed world during the last couple of years. And populist movements continue to bubble up.

Growth and Inflation—Not Surprising

Olga Bitel

The financial markets flip-flopped from 2015 to 2016, and again from the first half to the second half of 2016, as my colleague Simon Fennell explained previously. Are the financial markets reacting—correctly—to the economic environment?

2016: Boomerang in the Financial Markets

Simon Fennell, Partner

Previously, I discussed how 2016 brought more than its fair share of big surprises with Brexit and Donald Trump’s election, but in retrospect, it is clear that many of these surprises were years in the making. But politics and sports were not the only surprises in 2016; the financial markets also brought some changes. Were they, too, years in the making?

Central Bank Activity Manipulating Asset Pricing

Brian Singer, CFA, Partner

I often speak of fundamental value as the tide that inexorably pulls prices toward it over longer time horizons, and waves as shorter-term developments that impact market and currency prices. One such wave is central bank activity (ultra-easy monetary policies), which has had a great influence on market and currency prices and should continue to do so.

A Year of Surprises?

Simon Fennell, Partner

It seems as if 2016 has had more than its fair share of big surprises, but in retrospect, it is clear that many of these surprises were years in the making. Hindsight is 20/20, but I want to try to change the lens through which we look at a few of the examples this year.

How Geopolitical Forces Influence Markets

Brian Singer, CFA, Partner

In our post-Cold War world, geopolitical developments have become larger and more frequent—and because these developments affect market and currency prices, investors need to navigate them.

OPEC Cuts Production. Who Wins? Who Loses?

William Blair News

Tom Clarke, portfolio manager on William Blair’s Dynamic Allocation Strategies team, sat down with “Bloomberg Markets: European Close” to discuss the implications of OPEC cutting production for the first time in eight years.

Technology in Fundamental Asset Management

Ken McAtamney, Partner

Technology is widely deployed and utilized in the financial services industry, but traditional investment managers—by which I mean those that use a research intensive, long-only, fundamental approach—almost seem to have an aversion to modernizing their investment processes.

Will Trump's Infrastructure Policy Hold Up?

William Blair News

Brian Singer, head of William Blair’s Dynamic Allocation Strategies team, told U.K.’s Investment Week that President-Elect Donald Trump’s infrastructure policy would be difficult to achieve because of U.S. regulations and government structure.

You Can't Avoid the Consequences of Avoiding Reality

Brian Singer, CFA, Partner

The second stage of our investment process, the understanding of Why prices deviate from their fundamental values, helps us navigate the influential waves of macro themes and geopolitical risks. Several of these macro risks reflect the new populist reality across the globe and have had tangible short-term impact on the markets and may cause significant longer-term consequences on the investing environment:

Brexit Negotiations: Expect High Drama

Edouard Senechal, CFA, FRM

In the last few weeks, we’ve seen increased talk of a hard Brexit, fostered by comments from British Prime Minister Theresa May. Here are three quick observations from a game theoretical perspective.

ABCs of ECB Tapering Risks

Edouard Senechal, CFA, FRM

Before reviewing the European Central Bank (ECB) policy options, let’s take a quick look at the current macro picture in Europe.

Trump Win Drives Headwinds in Emerging Markets

Casey Preyss, CFA, Partner

Until we have greater visibility into President-Elect Donald Trump’s economic policies, it is difficult to predict what he will do as president. However, the basic tenets of his “Make America Great Again” platform point to broad headwinds for emerging markets.

Recent Macro Trends Should Persist in 2017

Ken McAtamney, Partner

Looking to the balance of this year and into 2017, we expect a number of the recent macroeconomic and market trends to persist.

U.S. Elections: Now What?

William Blair News

The November 2016 U.S. elections may go down in history as one of the most unconventional, leaving many investors wondering about the investment implications.

India: An Emerging Market Standout

Casey Preyss, CFA, Partner

As we noted in earlier blog posts, emerging markets have experienced a long spell of gloom, but we believe their underperformance relative to developed markets has run its course, thanks to valuations, flows, dollar strength, corporate performance, and China’s ongoing rebalancing. But India also continues to stand out.

Volatility Extends its Summer Vacation, but Risks Remain

Edouard Senechal, CFA, FRM

After the dislocations caused by Brexit, volatility went on a European-style summer vacation as the practical implications of Britain leaving the European Union were slow to appear. Now volatility is extending its vacation into the fall and, despite a small resurgence of volatility in September, markets are experiencing a period of relative calm.

Geopolitical Hotspots and Game Theory

William Blair News

Brian Singer, head of William Blair’s Dynamic Allocation Strategies team, discussed how he applies game theory to assess the investment implications of several geopolitical hotspots across the globe on Bloomberg Asia’s “Trending Business” TV program.

Something Old, Something New: Rebalancing in China

Casey Preyss, CFA, Partner

As we noted in another blog post, emerging markets have experienced a long spell of gloom, but we believe their underperformance relative to developed markets has run its course, thanks to a variety of factors, including China’s ongoing rebalancing.

Pockets of Opportunity in Emerging Markets

William Blair News

Romina Graiver, product specialist for global and emerging market equities at William Blair, told Morningstar why she believes emerging markets are an attractive asset class.

Influence of Macro Themes Beginning to Fade

Thomas Clarke, Partner

Over the past year, the second stage of our investment process—understanding Why prices of markets and currencies differ from fundamental value—has been very influential in the setting of our strategy. As such, we have been maintaining a low-risk posture in order to keep our exposure to macro-thematic headwinds dampened.

Key Investment Themes of 2016

Simon Fennell, Partner

Earlier, I discussed how this year’s performance versus 2015’s shows an interesting contrast across asset classes, regions, sectors, and styles. In many cases, those areas that performed poorly in 2015 have performed well in 2016, and vice versa. In our view, these significant changes in performance drivers can be explained by three broad themes that have prevailed thus far this year: a decline in bond yields, abatement in the strength of the U.S. dollar, and an increase in political uncertain.

Applying Game Theory to Macro Investing

Brian Singer, CFA, Partner

Fundamental value is an inexorable tide that pulls on the price of markets and currencies over longer-term time horizons. While the calculation of fundamental value is still necessary as an investment tool, it’s no longer sufficient in and of itself.

What's Supporting Emerging Markets?

Casey Preyss, CFA, Partner

Emerging markets have experienced a long spell of gloom, but we believe their underperformance relative to developed markets has run its course, thanks to a variety of factors, including that valuations, flows, the U.S. dollar are supportive, and corporate fundamentals are improving.

The 2016 Market Reversal

Simon Fennell, Partner

An analysis of this year’s performance versus 2015 shows an interesting contrast across asset classes, regions, sectors, and styles. In many cases, those areas that performed poorly in 2015 have performed well in 2016, and vice versa.

Rocky, Bullwinkle, and Game Theory

Brian Singer, CFA, Partner

The adventures of Rocky & Bullwinkle, as played out in the Cold War-era (1959–1964) television cartoon and reprised in film in 2000, illustrate many of the principles of game theory, which is applicable to investing.

Brexit: Slow, Steady Grind Down

Olga Bitel

Advisors and institutional investors continue to ask me what the implications of Brexit will be. My answer: Don’t think of it as a crisis—a massive collapse followed by a sharp recovery, which is how the market has reacted—but a slow and steady grind with some notable implications.

Central Banks' Endgame Not Good for Markets

Brian Singer, CFA, Partner

The perception of the market has been that central banks have had the market’s back by implementing easy monetary policies since the financial crisis. But we’ve seen that these kinds of central bank actions have historically ended poorly for the market.

World Heat Map: Turmoil and Opportunities

Casey Preyss, CFA, Partner

We’ve created a heat map of political uncertainty to highlight some emerging risks and opportunities across the globe. This map illustrates a notable trend: Developed markets are experiencing increasing political turmoil while emerging markets are seeing broad-based a more favorable political environment.
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