Equity Investors Should Look to Europe

To get the most out of the global recovery, equity investors should look to Europe. This according to a recent Bloomberg article. In an interview last week, Bjorn Lind, a portfolio manager at Sweden-based AMF Fonder AB, said: “Earnings growth will be better in Europe in the coming years and, most importantly, longer.” Lind says AMF Fonder is overweight Europe and underweight North America in its global funds, but he sees economic growth and some upside for the U.S. if President Trump “can deliver some tax cuts, some infrastructure investments, transforming the animal spirit to demand and investments.” According to […]

Goldman: Fund Managers Relying Too Heavily on U.S. Stocks

An analysis of professionally managed investment portfolios revealed to a team of Goldman strategists that “many investors are missing important potential sources of return as a result of putting too many of their “risk” eggs in one basket—U.S. equities.” This according to a recent article in Barron’s. The article argues that many portfolios appear to be overlooking “potentially attractive” opportunities in emerging market, emerging market debt and small-cap equities (in Japan, Europe and other non-U.S. developed countries). It also underscores the distinction between risk allocation and asset allocation, stressing that a “large allocation to a few assets classes can lead […]

Australian Hedge Fund Produces 23% Annual Returns by Staying Clear of Commodities

While many foreign investors may consider Australia a mining stockpile to feed China’s growth, one hedge fund proves otherwise. In a recent Barron’s profile, Marcus Hughes of LHC Capital explains how, since its inception in 2011, the $195 million Australia High Conviction fund has enjoyed annualized gains of more than 23% by avoiding the “meltdown” in commodity prices. LHC has purchased mostly small-cap (under Australian dollar 1 billion, roughly US$750 million) Australian stocks which they believe are priced way below their intrinsic value. Their strategy is to maintain a limited portfolio of only 10 stocks at a time and use […]

Investing Internationally: Countries or Companies?

The topic of global investing through allocating country risk was addressed in a recent CFA Institute interview with NYU finance professor Aswath Damodaran. While the goal of this approach is to minimize risk through maximizing diversified country exposure, Damodaran believes that much of it is misguided. “Here’s the strange thing: You don’t even have to leave your domestic market if you’re an American or a European to get country risk exposure.” He asserts that, by just using the S&P 500 companies, an investor could get exposed to “pretty much every market in the world.” According to Damodaran, investors often make the […]