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Top 10 Investment Research Topics Today

These trends are driving investors asset allocation.
Each day professional investors login to RFPnetworks asset class research feeds.
They use our feeds to follow markets & managers, and capture new ideas.
Below are the top 10 most read investment research topics by our users today.

Alternative Credit for Alternative Investors

Alternative Credit
RFPnetworks Alternative Credit research papers depicted by man at vending machine

It has not gone unnoticed by the some of smartest sales people we talk to, that both the buyers of businesses (Private Equity firms) and Buildings (Real Estate Investors) are now buying loans and CMBS respectively. The thinking goes like this:

Own the company and it's assets. Or own the senior secured financing of that company for a more certain double digit return, with low leverage, that is in line with fund targets.

For CMBS the story is similar, but potentially even more compelling. With interest rates still rising and property valuations falling in many major cities, yields on the mortgages behind these buildings are higher today. A phenomena that may remain for as long as rent and property valuations face continued downward pressures.

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Alternative Credit
Aegon Asset Management
In recent years alternative fixed income assets such as mortgage loans, infrastructure financing and private debt have become much more important categories for institutional investors. They can provide opportunities to increase portfolio yield when the (often lower) liquidity of these assets is not a constraint. This is typically the case for long-term investors, such as pension funds and life insurance companies.

U.S. Small Caps Undeniably Cheap

U.S. Equity
RFPnetworks U.S. Small Caps verus Large Caps research depicted by luxury goods sale

As earnings season uncovers the creaks at U.S. large cap stocks, investors are now spending more time researching U.S. small cap investment managers. Given a back drop of rising rates and recessionary pressures, it seems like a contrarian view. But the investment managers they are looking at are doing things differently. Here are 4 examples of the types of U.S. Small Cap companies these managers like:

4 Types of U.S. Small Caps for Recessions

1. Small Cap companies that have managed to keep their balance sheets strong. In doing so, they have protected themselves from rising rates.

2. Small Caps that are not affected by a strong dollar that could hurt non-domestic demand for their goods and services.

3. Small Cap companies that are not affected by supply chain dislocations, or reliant upon maintaining large inventories.

4. And if you can find them, small cap companies which have pricing power with their customers. Which is what the fundamental based research asset managers are doing.

The attraction to U.S. Small Caps today is supported by valuation. Comparing Small to Large Caps, various multiples suggest the market is trading at lows not seen in almost 50 years.

Dividend Investing Strategies Reaching Peak Popularity

Global Equity
Dividend Investing Outlook on RFPnetworks depicted by crowd at concert showing love signs with hands

Dividend investing strategies are starting to regain their investor appeal in the current economic environment. Particularly amongst Private Banking clients. Here are the key reasons why:

- Global equity market performance is down around 25% year-to-date (as of 30 Sep 2022).
- 2023 Global economic growth is expected to drop to ~4%, which is one third less than 2021.
- Interest rates are rising across the globe in response to double digit and continuously rising inflation.

This data does not look supportive for traditional Growth Investing strategies. The popular fast growing growth stocks of the bull market relied on cheap easy money and strong macroeconomics. Both of which are currently out of stock globally.

Whilst value investing strategies have staged a strong comeback, the are fundamental differences with dividend investing strategies. These core differences suggest that the outlook for dividend stocks in the current volatile environment is where new money into the equity market may flow.

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Global Equity
Capital Group
Growth strategies have long overshadowed dividend strategies. However, changing macroeconomic conditions have turned the tables and dividend investments are enjoying their time in the sun. While this coincides with value’s long-awaited comeback, value and dividend stocks have distinctive characteristics. We believe that dividends deserve to stay in a portfolio even when economic conditions improve. By adopting a fundamental approach to identify companies that can consistently pay and grow their dividends, investors could achieve long-term real return generation throughout the investment cycle.

Will India Continue to Outperform Most of the World?

Emerging Market Equity
RFPnetworks India Stock Market Research depicted by cultural event with People Standing in Front of Ganesha Statue

Many Investment Managers today forecast that India will have the largest Real GDP growth globally in both 2022 and 2023 (~7% and ~6% seems to be the consensus, respectively). However, there are concerns that despite strong company fundamentals, valuations are high and it may be time to go neutral or underweight the Indian stock market.

Such a tactical decision does not diminish the long term structural attractiveness of Indian Equities. The economy remains one fifth the size of China and is starting to be recognised as the China + 1 play. The demographics are a story in themselves with so much potential, given the economy's stage of development.

India represents a market with enormous opportunities. And the global institutional world is starting to wake up to these possibilities. We think this may explain why professional investor traffic flowing inside RFPnetworks to India Equity research is spiking.

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Emerging Market Equity
Mondrian Investment Partners
In what is turning out to be a challenging year for global stock market returns, the performance of India stands out within the emerging market asset class and global stock markets. In the nine months through the end of September, MSCI India has fallen by 9.7%, compared to the Emerging Markets index that is down 27.2%. Within Asia, only Indonesia and Thailand have performed better than India this year. This builds on a base of very strong long term returns, with India having outpaced the EM index over most time frames. The result has been that the weighting of India within the MSCI Emerging Markets index has increased further, reaching an all-time high of 15.3% by the end of the third quarter. As a result, India’s weighting has eclipsed both Taiwan and Korea, becoming second only in size now to China.

Impact of Lula on Brazil's Stock Market and Bonds

Economics
RFPnetworks Impact Lula Brazil Markets depicted by colourful street mural.

Who would have thought it was possible. To comeback and win the Presidency of Brazil with a margin of barely 2%. Markets are calm. Investors are happy. But how will Lula's new Presidency affect the Brazil Equity and Debt markets?

Which European Investment Grade Asset Manager?

Investment Grade Credit
RFPnetworks Investment Grade Credit Research depicted by man in hoody with chalk board behind him with flexed arms.

Looking at the latest fixed income asset allocation outlooks, European Investment Grade Credit is frequently overweight. But for very specific reasons. This is leading asset manager selectors to spend more time uncovering more managers that can tap into the latest alpha soruces. Here's what they are discussing.

3Q22 Global Outlook Season is Booming

Asset Allocation
RFPnetworks Global Financial Markets Outlook 3Q 2022 depicted by women wearing metaverse headset on neon background

It's that time of the year that global financial market outlooks fill our research feeds. They are popular throughout the entire business cycle. But this time around clicks have gone through the roof.

We only can conclude that investors are feeling pain in their portfolios. And are looking for the right medicine to soothe their dry throats. And as the bear market firmly takes hold, the 60-40 portfolio has stopped working, and the economy heads towards recession, they are clearly looking for new ideas.

What Happens When Liquidity Dries Up?

Economics
RFPnetworks Economic Research on Liquidity depicted by dry river bed between mountains.

As central bankers raise rates across the globe in their fight against inflation, institutional investors are turning their attention to liquidity. In this new chapter of global political economy, a world drained of liquidity is a world where assets are no longer priced on fundamentals.

Being short liquidity means sellers of assets will by necessity take what they can get in order to meet their commitments. Or put differently, being long liquidity facilitates the purchase of quality assets at deep discounts to intrinsic value.

This presents a dichotomy for institutional investors:

An ALM driven investor will be guided by a series of strategic asset allocation benchmarks and associated risk budgets. Which empirically provide a confidence level that their assets will generate enough returns to cover their current and future obligations. So the tendency is to sit out the storm.

But there are hard core investors who see the removal of liquidity from the global economic system, as an opportunity to pounce. Their research inside RFPnetworks is crossing all asset classes. Searching each of the 11 feeds for terms such as "cheap", "intrinsic value", "discount", and "distressed".

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Economics
Ruffer LLP

We see danger ahead. Markets are still too high, and protection is expensive in an increasingly nervous world; common sense suggests one should invest conservatively, and in safe assets. In a world where people find themselves without the ability to pay commitments as they arise, forced selling drives prices. Among risky assets like equities, one of the counter-intuitive things in a liquidity crisis is that securities perceived as safest and most liquid go down sharply, because investors are forced to sell what they can, not what they want to. We therefore regard plentiful liquidity in the portfolio as overwhelmingly attractive; it allows us to make the most of the opportunities that arise in the aftermath of a crisis. But first we have to get through the storm.