David Ashworth

The hike didn’t come about in the September 2015 meeting. This led to a fall in equities. They showed their displeasure over the delay in the rate hike.

Investor flows in high yield bond funds were positive for the third successive week last week, but their volume fell sharply.

Market demand for 13-week Treasury bills rose, led by a rise in allotted indirect bids. The percentage of indirect bids rose to 25.1% of the accepted bids, up from 21.6% a week ago.

Irrespective of how strong economic fundamentals look, investors should be careful about investing in emerging markets and other economies that are relatively unknown to them.

The Putnam Europe Equity Fund – Class A (PEUGX) fell 4.3% in 1Q16, making it a below-average performer among the 12 funds in this review. In the past one year, PEUGX has fallen 7.9%

With Trump’s perceived warmth toward Russian President Vladimir Putin, the possibility of Russian economic sanctions being removed has emerged.

Goldman Sachs expects WTI crude oil price to be $55 per barrel in 1Q17 and 2Q17. These estimates were raised from $45 and $50 per barrel, respectively.

Markit’s “flash” reading of the US manufacturing PMI, released on November 23, put the index at 53.9 in November, as compared to 53.4 in October.

Goldman Sachs has gone bullish on commodities. The finance major, which is the biggest commodities dealer (in sales), has advised clients to go overweight.

The two benchmark equity indices—the Nifty 50 and the S&P BSE Sensex—fell each trading day since the demonetization except for November 10 and November 22.

Banks saw a rise in term deposit accounts since the demonetization. As a result, commercial banks sharply reduced their deposit rates.

Due to the expected fall in inflation, the RBI will likely undertake more cuts in the repo rate. These rate cuts will aim to boost consumption.

The demonetization that has been in effect since November 9 is expected to have a negative impact on inflation. Consumer spending activity almost stopped.

The demonetization of the 500 rupee note and the 1,000 rupee note will likely hit the Indian economy hard in the short term.

The 500 rupee note and the 1,000 rupee note were demonetized at midnight on November 8. The move aimed to curb black money in the financial system.

Narayana Kocherlakota, 12th president of the Federal Reserve Bank of Minneapolis, said central banks have been able to control inflation better when left alone by the government.

If you look at the Republican Party’s stance on monetary policy in general and the Federal Reserve’s in particular, you might assume that the pace of rate hikes is going to pick up.

The possibility of a 25-basis-point rate hike in December is quite high since Donald Trump was elected president, and the markets are already pricing in a hike.

In his November Insights newsletter, Richard Bernstein stated, “It is incredible that investors have basically been wallflowers during the second longest bull market of the post-war period.”

According to Richard Bernstein, “Few investors seem to appreciate the magnitude of the opportunity cost of avoiding equities.”

Richard Bernstein believes that investors’ flocking to fixed-income products and shunning equities has increased their risk.

After expressing his thoughts on the Baby Boomer generation’s having become risk-averse, Richard Bernstein moved on to the topic of the safety of “safe” investments.

After stating that the market isn’t in a low return environment, Richard Bernstein moved on to discuss the reasons cited by many for conservative asset allocation.

In his November 2016 Insights newsletter, Richard Bernstein talked about the growing opportunity cost of investing in equities (SPHD) (VIG).

Even if you haven’t followed the Donald Trump campaign closely, you likely know that he was very specific in his thoughts about two countries: Mexico and China.

After the election of Donald Trump, the iShares MSCI Brazil Capped ETF (EWZ) slipped.

Donald Trump’s victory in the recently concluded US presidential elections could have a measurable sociopolitical and economic impact on Europe.

Donald Trump has been vociferous about cutting taxes. He intends to reduce the current seven tax brackets to three.

370 economists have taken exception to the ideas Trump has been propagating about the state of US manufacturing (XLI) (IYJ).

A statement signed by 370 economists on Donald Trump’s proposed economic policies said that he is “a dangerous, destructive choice for the country.”

The Federal Reserve’s second last meeting of 2016 is now over, leaving only one meeting left in which the central bank can enact a rate hike.

Though non-farm payroll additions for the last two months have been lower than the 12-month average leading up to September 2016, they’ve still exceeded 150,000 in both months.

After the release of the FOMC’s November statement, Bill Gross said that monetary policy in the United States is steadily moving toward normalization, though its pace is slow.

The expected occurred on November 2, 2016, when the FOMC (Federal Open Market Committee) left the federal funds rate unchanged at 0.25%–0.5%.

Equity markets in BRIC countries mostly rose. Only Russia (RSX) posting a small decline in October.

Treasury yields witnessed a secular rise in October. Except for yield on the one-month Treasury bill, which remained flat month-over-month, all other tenors saw a visible rise in yields.

Like in September, monetary policy and associated releases were made headlines throughout October.

A study by CookESG Research’s Fund Votes in March 2016 showed how mutual fund companies voted on climate change resolutions.

The Forum for Sustainable and Responsible Investment notes on its website, “Mutual funds are one of the most dynamic segments within the ESG investing space.”

Some stock indexes have taken into consideration ESG (environmental, social, and governance) criteria, applying the methods outlined in the previous article to tackle ESG issues.

A sustainable coffee effort In the previous article, we looked at industry-level and investment-level examples of how things have been on the sustainable investment front and the developments that are helping certain industries. In this article, we’ll look at a company-level example by way of Starbucks (SBUX). Starbucks employs sustainability standards called C.A.F.E. (Coffee and […]

Though it might seem that considering environmental impacts while making investments is an oddity that arouses the interest of a niche group of investors, this assumption is incorrect.

One reason that renewable energy hasn’t caught on in a big way is the cost associated with energy generation.

On December 15, 2015, the Obama administration signed a bill for the extension of tax credits to renewable energy.

There are some important things to know when analyzing ESG issues. Unlike traditional analysis, there’s no particular outlined method for conducting ESG analysis.

Established in mid-2004, the Enhanced Analytics Initiative was aimed at integrating extra-financial issues with traditional financial analysis with a long-term view.

The onValues report on behalf of the Enhanced Analytics Initiative made several conclusions regarding the progress of its understanding of environmental, social, and governance criteria.

Some issues considered under the social criterion when evaluating a company’s products and practices are human rights, human capital management, and work conditions.

Some issues considered under the governance criterion when evaluating a company’s products and practices are executive compensation and bribery and corruption.

Some issues considered under the environmental criterion when evaluating a company’s products and practices are pollution, carbon emissions, and resource depletion.

The Principles for Responsible Investment (or PRI) calls itself “the world’s leading proponent of responsible investment.”

Socially responsible investing is known by several terms, including sustainable investing, green investing, and ethical investing.

The financials sector continues to be the top-invested sector, with four of the 12 funds choosing it as their most preferred sector. However, the number of funds choosing financials is down from six in the previous quarter.

The past six months have been horrific for VGEAX, as it ranks dead last among the 12 funds chosen for this review.

Unlike most of the funds in this review, VEURX is not actively managed.

UEPIX’s high exposure energy stocks has been extremely beneficial in 2016, especially after February 11, when crude oil prices touched a multiyear low.

TEMIX was not doing as well three months ago as it is presently. As the year has progressed, the fund’s performance has improved.

The financials sector is still the biggest sectoral holding of TEMIX, with industrials coming in a close second.

So far, 2016 has been an utterly forgettable year for the T. Rowe Price European Stock Fund (PRESX).

Consumer discretionary is the most-invested sector by the PRESX, followed by financials. These two sectors combine to form 31% of the portfolio.

The Fidelity Advisor Europe Fund – Class A (FHJUX) has been an above-average performer in YTD 2016, ranking third in the one-year period ended October 21, 2016.

Industrials and financials are the top two invested sectors of FHJUX, and each sector commands more than one-fifth of the portfolio.

There has barely been anything positive about AXEAX so far in 2016. The fund has a high portfolio turnover rate and has seen its top-invested sectors contribute negatively.

The Columbia European Equity Fund (AXEAX) invested in 56 holdings in September 2016, and it was managing $449 million in assets.

Although the industrials sector has done well for AEDAX, the remaining top three invested sectors have been quite substantial negative contributors—especially the consumer discretionary sector.

In this series, we’ll look at how 2016 has panned out for Europe-focused mutual funds so far. We’ll take an in-depth look at the portfolios of 12 funds and conduct attribution analysis to see which sectoral or stock picks helped or hurt these funds.

If you’ve reached your investment horizon and have seen substantial gains, it would be wise to liquidate or reallocate to more conservative funds.

The Vanguard PRIMECAP Fund Investor Shares has had a great 2016. YTD and in the one-year period, it has been the best performer among our 12 funds.

VPMCX counts information technology, healthcare, and industrials as its core invested sectors. These three sectors make up a combined 80% of the portfolio.

The Vanguard Growth Index Fund Investor Shares (VIGRX) is an above-average YTD performer among the 12 funds we’ve chosen for review in this series.

The Vanguard Growth Index Fund Investor Shares (VIGRX) is an index fund, which means that it passively tracks an index and is not actively managed.

The Invesco American Franchise Fund Class A (VAFAX) finds itself right in the middle of the pack of 12 funds, performance-wise, YTD in 2016.

Information technology, consumer discretionary, and healthcare make up the core holdings of VAFAX. These three make up a combined 77% of the fund’s assets.

TRBCX has had quite a poor run in 2016 so far. The fund places in the bottom three in the YTD period among the 12 funds in this review.

SHRAX has been a below average YTD performer. The past year until October 14 was hard on the fund. It placed dead last among the 12 peers in this review.

Information technology, consumer discretionary, and healthcare form TRBCX’s core. These top three sectors command over one-fifth apiece of total assets.

The sectoral breakdown of SHRAX is unlike any other mutual fund in this review, with healthcare as its biggest holding, commanding 35% of the portfolio.

Although it remains an above average YTD performer among the 12 funds in this review, MFEGX has slipped from the top spot in the one-year period.

Information technology, consumer discretionary, and healthcare sectors form the core of MFEGX, with a combined 73% of the fund’s net assets.

The Harbor Capital Appreciation Fund Investor Class (HCAIX) has had a terrible 2016. It’s the second-worst performer YTD among the 12 funds in this review.

Tech stocks lie at the heart of HCAIX, making up 45% of the portfolio. Consumer discretionary and healthcare are the fund’s other biggest sectors.

The Franklin Growth Fund Class A has done well enough YTD in 2016 to place among the top three funds among the group of 12 we’re reviewing in this series.

Unlike most other funds in this review, the Franklin Growth Fund (FKGRX) has industrials as its most invested sector.

The Fidelity Growth Company Fund (FDGRX) places ninth in the YTD period among the group of 12 funds we’ve chosen for this review.

FDGRX’s core sectors are information technology, consumer discretionary, and healthcare. The first two sectors make up a little over 60% of the portfolio.

FBGRX has had a below-average 2016 so far, placing seventh in our select peer group of 12 funds in terms of point-to-point returns.

FBGRX’s core sectors include information technology, consumer discretionary, and healthcare. The first two sectors make up a combined 68% of the portfolio.

The American Funds AMCAP Fund Class A (AMCPX) comes in second place among the 12 funds in this review for the YTD period.

AMCPX’s core sectors are information technology, healthcare, consumer discretionary, and industrials, which form about one-tenth of the portfolio apiece.

Worries about Brexit’s impact on US financial markets have given way to concerns about US elections. But so far in 2016, US stocks and funds have done well.

The most visible impact of the ECB (European Central Bank) claiming that it had neither discussed extending its asset purchase program nor any tapering of it was on the euro (FXE).

ECB chief Mario Draghi had nothing to say about either tapering or extension of the bond buying program.

The ECB (European Central Bank) released its latest monetary policy statement on October 20, 2016.

Signs of bear markets After outlining why he thinks bull markets in the US are more common than investors think, Richard Bernstein went on to discuss the signs of bear markets. He suggests that the prevailing pessimism of an impending bear market is unjustified. According to him, based on historical evidence, there are three indications […]

A legitimate bull market In this series, we’ve taken a look at Richard Bernstein’s views on investors’ fear of an impending bear market. In Richard Bernstein Advisors’ October Insights newsletter, he rejects the notion that the current rise in US stocks (SPLV) (OEF) has been brought about only by the Fed’s easy monetary policy. In the […]

A bull run with legs In Richard Bernstein Advisors’ October Insights newsletter, after dismissing the belief that the Federal Reserve is to blame for stock price inflation (IWD) (VTV), Richard Bernstein moved on to explain the reason for the current bull run. Stating that “fundamentals have improved dramatically, and have been a major support to the […]

Rate cut and stocks Monetary accommodation is generally good for stocks. A cut in interest rates makes borrowing cheaper for households and businesses, pushing them to spend and invest. A rate cut is good for stocks because it allows companies to borrow money at lower interest rates and invest in new plants, machinery, or operation expansion, […]

In Richard Bernstein Advisors’ October newsletter, Richard Bernstein noted that although the bull run in US stocks is in its seventh year, investors remain afraid of equities.

Job additions, which had scared policymakers and market participants alike with the downward revision for April and dismal additions in May, seem firmly back on track.

Retracting monetary accommodation on time is crucial as well. This was the chief reason why three dissents took place in the September FOMC.