Investment

Key Points Interest rates are rising and credit conditions are tightening, creating challenges for investors in today’s credit market. Debtors with slower earnings growth may struggle to cover the interest accumulated on borrowed funds. Businesses with high levels of debt and slower revenue growth may face default or distress. The large amount of US corporate fixed-rate debt coming due in … Read More

The dominance of Institutional Shareholder Services (ISS) and Glass Lewis in the proxy voting system may limit the diversity of perspectives for investors making proxy votes. OxProx, a new publicly accessible database, aims to provide a platform for comparing proxy voting records among asset owners and asset managers globally. Pension plans and large investors can mitigate the duopoly issue by … Read More

Key Points: Distressed debt investing opportunities can arise in various sectors during different economic cycles. The current environment, with higher interest rates, has created a growing opportunity set for credit market investors. Sectors such as utilities, REITs, healthcare, and telecommunications may offer attractive distressed debt investment options. Investors should focus on risk/reward ratios and prioritize capital preservation in distressed debt … Read More

Key Points: Global supply chains have undergone significant restructuring, resulting in shifts in economic data correlations. The US manufacturing sector remains resilient, experiencing a boom fueled by expansionary fiscal policies and efforts to bring semiconductor production onshore. On the other hand, importers in North America and Europe are “de-risking,” leading to shifts in export trade flows in Asia. Price dynamics … Read More

Key Points The collapse of Silicon Valley Bank and Signature Bank has raised concerns about regional banks’ exposure to the commercial real estate sector. Regional banks are providing a significant amount of real estate lending and have a fair amount of exposure. The liquidity and condition of office real estate are the two main issues to consider. The office sector … Read More

Key Points: The worldwide value of mergers and acquisitions dropped to around US$1.22 trillion at the end of June 2023, down from US$2 trillion at the end of the second quarter last year. Higher interest rates and a less friendly regulatory environment are the primary reasons for the decline in M&A activity. Despite the global drought in M&A, certain sectors … Read More

Equity factor strategies have faced challenges since the COVID-19-induced market crash of 2020. These challenges have led to underperformance compared to cap-weighted indexes. While there are various explanations for this, our focus is on the question of whether it is possible to align a factor portfolio’s performance more closely with a cap-weighted benchmark while retaining the benefits of factor investing. … Read More

Key Points: The post-pandemic environment of geopolitical tensions, rising inflation, and increasing interest rates has reshaped the commercial real estate (CRE) market. With interest rates higher than last year, the outlook for cap rates and leverage associated with CRE investments has changed. There may still be opportunities for investors in certain segments of the CRE market, especially with potential cresting … Read More

The Worth of Art: Financial Tools for the Art Market by Arturo Cifuentes and Ventura Charlin offers achievable objectives for navigating the art market, such as determining how the market values different works by an artist and estimating returns on the artist’s overall body of work. The book discusses quantitative techniques that yield insights into the art market, such as … Read More

Key Points: The predictive power of the yield curve is often overstated, as the causal correlation between long and short rates is weak. The history of the yield curve shows that long and short rates move in the same direction but at varying rates. The Federal Reserve’s influence on long and short rates has evolved over time, leading to a … Read More