Can the US Become a Magnet for Manufacturing?

It’s been a long time since the US has been widely appreciated as a good place for multinational companies to locate new manufacturing plants. Chinese labor is cheap, and emerging markets are increasingly efficient, so why should a global automaker or technology giant choose to manufacture in the US?

The answer is because the US has dramatically improved its cost advantage versus industrialized countries, and has narrowed the gap with emerging markets as well. (more…)

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Is Active Management Dead?

Active equity managers have had an extraordinarily difficult time delivering premiums over the last year, especially managers with a bottom up approach focused on corporate fundamentals. (Active strategies driven by macroeconomic concerns have done better recently.)

Here’s why we think active strategies driven by corporate fundamentals are down, but not out—as ably explained by my colleague Andrew Chin in an article first published in Institutional Investor’s Global Market Thought Leaders blog. (more…)

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As the Fed Twists, Seize Opportunity to Transfer Wealth

It remains to be seen whether the Federal Reserve can stimulate the economy with its latest “twist” strategy for lowering interest rates, but today’s ultralow rates create one clear opportunity: if you have personal wealth that you intend to leave to family or charity, now is the best time in decades to initiate certain wealth-transfer strategies. (more…)

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Have Target-Date Funds Lost Their Allure?

A recent article in Pensions & Investments discussed a fund company survey that suggested defined contribution (DC) plan participants aren’t happy with their target-date funds. The survey found that only 22% of participants were “very satisfied” with their target-date investment. The fund company—which isn’t a target-date fund provider—called that “pretty darn low.”

But the survey also found that another 57% of respondents were “somewhat satisfied”—hardly a condemnation, in our view. Altogether, 79% of respondents had a positive view of target-date funds. That seems pretty darn good to us.  (more…)

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Beware of Crowded Trades

Trying to avoid a repeat of the last market disaster sows the seeds for the next one.

The collapse of large growth companies after the tech bubble burst in 2000 led to strong leadership by small-cap value stocks for many years. And the market plunge in 2008 has led to investors’ crowding into a number of “safe” trades, such as high-dividend stocks, Treasury bonds and passive equity strategies.

These are not unreasonable strategies, given today’s economic and political uncertainties. But with most investors on the same side, today’s “safe” trades have become very, very expensive.  (more…)

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Bond Strategies for the Age of Government Deleveraging

Hardly a day has gone by in 2011 without fresh headlines about the sovereign-debt woes of Greece and other developed countries. It’s still unclear which path governments will take to resolve their growing debt burdens, but one thing is clear: the path taken to fiscal rectitude will have great implications for fixed-income investors.

In our view, apart from default, there are three possible ways out of a government debt crisis: growth, inflation and austerity.  (more…)

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