Thought Leadership

We are seeing unprecedented market concentration in broad-based indices.

Equity markets rallied in Q1 2023, with much of what underperformed in 2022 reversing course to rebound sharply to start the year.

Our research suggests that it’s not just the presence of women in leadership positions, but broader gender equity characteristics that may contribute to stronger corporate performance.

We believe small cap stocks entered the correction phase of the negative earners’ outperformance in second-half 2021 and could continue to see relative weakness in these names throughout 2022.

We look at the current valuation of small caps and consider the potential behavioral implications that typically emerge during investment regime changes.

The rapid equity market rebound following the historic drawdown in March 2020 has been anything but expected. Investors have continued to support mega-cap growth
stocks which appear to be significantly overvalued by a number of different measures. With multiple indicators signaling significant risk based on historical trends, investors would be prudent to prepare for a market correction and shift to a more valuation-based assessment of the currently in-favor growth stocks.

Historical evidence suggests that periods of outperformance by negative earning stocks is not a new phenomenon. This outperformance has tended to be cyclical, not persistent, and concentrated around speculative environments.

Growing public and regulatory pressure is increasing the availability of climate risk data and analytical tools, allowing asset managers to quantify risks and opportunities in security analysis, supporting their efforts to maximize risk-adjusted returns.

During the last decade, factor momentum has degraded, favoring shorter-term factors and reversal, which is more difficult to capture at the portfolio level. The implementation shortfall associated with factor timing strategies can be addressed by applying a time-weighting function to counter short-term cyclicality. Our approach works to harness the power of longer-term factor rotation to generate higher risk-adjusted alpha accompanied by lower turnover.