On Balance
Outside of Banks the clues at a stock, sector and market level that give guidance to investors as to what to do or not do right now are few and far between. Both the S&P 500 and Stoxx 600 are no longer in the re-rating phase of the Apollo investment cycle and that points to more volatile times and as a consequence many sectors have transitioned from Re-rating to De-rating or Value
The consequence of recent events (SVB) meant that the market had to reconsider the discount rate being applied to future cash and the repricing meant the sector has come back to the Orange line – FV. A moment that we call ‘back to value’ – zero premium to present value so surely an opportunity to buy?
One of the most significant investment developments of recent years has been the emergence of factor-based investing as a mainstay of investment management.
For years now we have been extolling the obvious virtue of knowing where value is at any point in time – looking at the expected returns and the discount rate being applied to those cash flows.
As we start a new Smart Alpha “Sprint period” for out S&P500 based Strategy, it is worth reviewing how we have performed so far this year.
In the Spring of 2022 European Banks started to generate Accelerator long signals, slowly but surely, one by one until the sector itself lit up in a green tinge from April – June and here we are today coming out of a positive earnings season, seeing the sector re-rating.
So, when asked the question ‘Why did you own BP?’ you point at the image of the Apollo Investment Cycle. Answering the more difficult question, ‘Why did you not own BP during the last 2 years ?’ That’s more awkward.
At Libra we think differently and deliver the best user experience for Active equity investors applying the years of experience and understanding that we have in equity markets. We not only know what information is going to make a difference to client performance but provide the best experience.
It’s the big calls that make the big difference to both Equity and Cross Asset investors and we’ve been doing this successfully for years.
In Part I of the inquiry, I set out some of the structural problems that the Finance Industry is facing in the wake of the macroeconomic adjustments we experienced over the last 18 months or so and the impact that they have had on portfolio returns both in 2022 and in the future. In part II I take a closer look at the range of investment approaches – from passive to active currently being operated in the market and at the types of investment models underpinning them.