Equities

The market craves stability and transparency. As an efficient auction mechanism, it relies on visibility to price stocks and economic activity. Typically, the market—and people in general—do not like change, but this time, as we stand at the precipice of a tremendous change, what we are seeing is actually a potential return to real stability, normality and transparency.

Tesla’s current valuation reflects aggressive assumptions about its dominance of the electric vehicle market and its ancillary businesses. While parts of Tesla’s exciting story may materialize, progress is unlikely to be as linear as the market suggests. In fact, the market may be overlooking several key risks

Understanding potential value destruction from climate change is challenging. A strong framework can significantly improve visibility. There are hundreds of companies that appear to have value at risk from climate change greater than their market capitalization – climate zombies. Insights on where to find, and value, risks in this blog.

Unlike horses that need blinders to keep them narrowly focused on winning a race, investors should expand their field of vision to consider the risks around them. Matthew Benkendorf, CIO of the Quality Growth Boutique, shares 5 principles that are critical to help successfully navigate emerging markets.

Charlie Munger, Warren Buffett’s brilliant partner, famously remarked that their investment approach was “simple, but not easy.” After nearly 40 years of investing, Portfolio Manager Ed Walczak explores how the Quality Growth team aims to overcome the many challenges investors face today in determining the “true” value of a company.

Many emerging markets are more resilient to external shocks than in the past and can better withstand the pressures of a stronger US dollar. And so far, many EMs have been fairly conservative in their use of stimulus in response to Covid-19. This increases the potential for prosperous times ahead.

History is a good reminder that it is difficult to predict market reactions, and that elections do not have as tremendous consequences on markets as people may believe. Market anxiety over election impact is generally over-exaggerated. The underlying health of the economy and corporate profit growth, ultimately, are the factors that will impact stock prices.

The ongoing trade war and eroding U.S.-China relationship have been a catalyst for making it less attractive for Chinese companies to seek a public listing in the United States. The Chinese government is finally making good on promises to open up domestic markets to foreign investors. Additionally, Hong Kong and China are taking steps to make local listings more attractive, especially to high-tech start-ups.

Our equity experts from the Quality Growth Boutique are constantly trying to find exceptional companies. In this insight, they explore businesses that may be high quality today that were not in the past. Does the current COVID crisis change the playbook for investors in any way?

Ethnic minorities account for 40% of the US population, 29% of bachelor degrees, but just 16% of Fortune 500 board seats. Sub-conscious bias plays a big role. A structured approach to hiring and mentoring are required for change. Diversity can drive innovation and shareholder returns.

Like a pendulum, once equity markets swing one way, they will swing back. Investors can manage market swings by actively allocating to international equities using 3 timeless tactics: diversification, exposure to a unique opportunity set of strong businesses, and buying at attractive valuations.

Portfolio Manager Ed Walczak and Client Portfolio Manager Grant Bughman provide an update on the markets, US Equity portfolio positioning and outlook.

3 steps to help navigate the storm: recognize change, keep an eye on your horizon, and get ahead of structural shifts that will follow the shock of death and economic damage. How we frame the crisis in terms of capital preservation and recovery will affect investment decisions.

We are now witnessing a market panic as the continued spread of the coronavirus is threatening a global recession. Portfolio managers Ramiz Chelat, Jin Zhang and David Souccar explain how they are adjusting their portfolios to take advantage of market dislocations and why quality growth businesses can help provide downside protection.

Modern slavery affected an estimated 89 million people during the 5 years to 2016 – more than Germany’s population. Its profits creep into our homes through imported goods enabled by complex supply chains. Imported goods with content produced by forced labor is a central problem. Active investors have a role.

Jin Zhang provides insights on changes in the global supply chain, long-term beneficiaries of the trade war, India’s growth prospects and Brazil’s path to reform.

David Souccar talks about markets in 2019, long-term structural risks, performance over the cycle, investing in Japan, and international vs US exposure.

Matthew Benkendorf discusses growth vs value investing, finding quality growth opportunities amid volatility and how to approach the markets in 2020.

Donny Kranson talks about UK elections, fiscal stimulus, growth vs value investing, ESG issues and positioning for opportunities in 2020.

Brian Bandsma discusses India’s slowdown, companies impacted by the trade dispute, redirection of global supply chains, and country rhetoric around trade and technology.

The US-China interim agreement reduces recessionary risks in both countries. However, the trade war is far from over and risks of a re-escalation persist.

Employees are consumers that power the economy. They also represent a large part of valuations worldwide. So why are investors so bad at measuring people impact? Understanding how and why employees add value enables companies to get the most from their staff, delivering better results for savers and society.

In our new audio series, Vontobel Quality Growth Portfolio Managers offer insights on how to navigate volatility. You can listen to our experts’ views on the risks in equity markets today and how they identify companies that are on the right side of long-term structural trends.

What is the purpose of your company? Not what it does, but its purpose. Its goals. Its compass. A meaningful answer is usually pretty short, understood by a layman, and can provide a light to follow through tough decisions. The pressure for companies to rethink their purpose, and the sharing of rewards across a company’s stakeholders, has risen sharply.