Double-Click to Enlarge Chart |
Last Updated: 24th Nov '12
We're lending our hedge fund metrics analysis to measuring ETF performance over the past years to montth-end October '12. The basis for converging hedge funds and ETF analysis are to do with the fact that a) many hedge funds are increasingly using ETFs to express their directional / hedge views on macro variables and, b) FPM strongly believes the terms for passively-managed / index-following ETFs are compelling for any multi-manager portfolio. Low fees and greater liquidity, than say hedge funds, gives an easy access to directional 'kicker' allocation.
Double-Click to Enlarge Statistics |
This article is a 'celebration' of where we visualise poorly allocated resources will shift as exemplified in the long-only Investment Sector Funds (ISFs as I like to acronym ETFs). In the visual-nature of this article, a professional heavyweight investor's view below, which we at FPM finds curious! Just in case you haven't seen Jefferey Gundlach's proposition in the main-stream financial media entitled Gundlach
Sees No Lost Decade as Biggest Bears Flirt With Stocks published by Alexis Leondis -
Sep 14, 201:
Stocks Won't Repeat Lost Decade, Gundlach Says
Stocks Won't Repeat Lost Decade, Gundlach Says
Whatever the pretext of the Bloomberg and DoubleLine Capital's presentation. Doubleline is the $40 bn AuM asset management firm that Gundlach founded in Los Angeles in 2009. In terms of the article's propaganda, what is stark is that an eminent bond-shop is compellingly allocating to equities! There are myriad reasons for this perhaps. Is the representation of the article that listed equities may enjoy a prolonged rally soon and that bonds might fall out of favour? Aside of the confidence-trick policy measures to kick-start economic continuity, we had better believe in an "earnest economic recovery and stability".
Earnest economic recovery and stability might be interpreted as consumers and corporations continuing to transact / turnover in expanding economic activity. Yet, industrialisation on an unprecedented global scale with BRIC-populus inclusion is potentially mind-blowing as a game-changing milieu!
While the great forces of economic entities grapple for the dwindling finite earth's resources, nature is battling back via "climate revolution". FPM's supports the progressive and special Dame Vivienne Westwood, who has campaigned to stop climate change and commends economic prudence. The damaging climate-change threat is real (viz. greater intances of extreme weather and indicatively, insurance-linked bonds market). The policy makers, corporate executives and relevant individuals should have commensurable "active resistance" or response. It follows that economic activity therefore has to be curtailed to some extent.
STOP PRESS: an evidence of this view is "India's capital widens ban on plastic bags" published on AFP 23rd November.
Back to the Bloomberg presentation: Gundlach's interview is either taking the heat off the credit sector from overheating / 'bond bubble', or he really suggests equities are recovering towards a secular bull-run, at least auguring an investment climate flip-flopping between favourable to equities and bonds cyclically. From our fund manager transactions (FMT) perspective, Gundlach proposition is the same as an equity-focused hedge fund leveraging of its research into the broader capital structure asset plays and building a fixed income / credit team. The speculation is that, equity-threats are opportunities for some.
FPM's "Next Stop" Views:
+ Less bond lure as inflation-creep is simmering in dissimulated headline figures.
+ Equity rally has scope as capital structure of companies better refinanced in debt / equity ratio terms. Expecting equity returns to stop being a residual call on companies' earnings except fincos.
+ The switch away from risk-averse gold assets are likely to flow into black gold, i.e. asset flow into countries and companies realated to raw-material resources in emerging and frontier markets. Not just oil and commodities, take China, it is rich in one of the greatest resources "human capital"!
+ China and other rapidly expanding economies will inevitably catch a cold from the developed nations' consumers sneezing! So for those economies developing domestic consumption and wealth will become a priority than typical export-driven-growth model.
....