Healthcare Trends – The Full Story

It’s an obvious point, but having access to accurate information is a critical part of being able to manage healthcare costs for the long term. Economic commentators often talk about the increase in healthcare costs (or trends) as a single figure, but, as the S&P Healthcare Claims Indices demonstrate, the truth is that healthcare trends can vary significantly across geographic regions, among the different types of healthcare services and across different segments of the insured population. Read more [...]

Investment Grade U.S Preferreds, 16%!

U.S. Preferred securities continue to provide healthy returns for investors.  The S&P U.S. Preferred Stock Index has returned 0.79% for the month and currently returned 13.81% total return year-to-date. The ratings break-out between constituents of the preferred index has the S&P U.S. Investment Grade Preferred Stock Index even with its high yield counterparts at 0.83% on the month.  A current trend of risk-off from junk is reflected in the indices as the investment grades have returned Read more [...]

Active vs Passive: European active funds generally underperformed their benchmarks but…

Euro-Denominated Equity Funds Overall, European equity markets have continued their upward trend over the past year, despite geopolitical concerns in Ukraine and uncertainty over the ECB’s willingness to support struggling economies. It is generally believed that active management may be able to add value to investment portfolios in highly turbulent markets such as this one. However, this belief was once again found to be inconsistent with our findings. Over the past year, about 74% of European Read more [...]

Fear of Falling Prices

Anxiety over deflation is wide-spread and increasing.  The New York Times lead editorial on Sunday warned that weakening commodity prices may be a harbinger deflation or a hint of economic decline.   Despite a few contrary voices, both policy makers and investors seem concerned.  Are the fears misplaced? Or would deflation be a large step backward? The chart shows 101 years of American inflation measured by the CPI. Prices move all the time – not just stock prices but prices of almost Read more [...]

Are Green Bonds Really in the Red?

The green credit market has grown 50% annually since 2007, however market sentiment remains mixed on performance.  The S&P Green Bond Index is down 0.99% YTD, when most of the bond market has done quite well in 2014.  Abundant growth in concert with poor performance could prompt the suggestion that investors are deriving utility from social responsibility in lieu of returns. Abengoa Greenfield’s equity shares fell 18%, while the price of their 2021 notes fell from $96 to $83 Thursday, Read more [...]

THIS Could Change If Oil Slides 50% More

Now that brent broke the $80 mark, many are questioning whether a bottom has been reached.  The combination of slowing Chinese demand growth and Saudi's will to maintain market share make this an unlikely bottom, but it depends more on the supply growth than the slowing demand growth from China. Kuwait and Saudi Arabia have shown signs they are willing to tolerate lower prices.  If prices continue to drop significantly, there may be not only a pickup in demand but a split where regions that Read more [...]

Real Estate Rising and GICS

Real estate, once the villain of the financial crisis, is now lauded as the place to find yield, diversification and maybe stability.  Before REITs became eligible for the S&P 500 in October 2001, real estate investing either meant direct ownership or a specialized corner of the stock market.   The recovery from the financial crisis focused attention on real estate and REITs to understand what happened and why.  With equity markets at record highs and yields and interest rates at record lows, Read more [...]

Sukuk Issuance Trend

According to the Dow Jones Sukuk Index, the new issues that being captured in 2014 YTD totaled USD 11.8 billion, which represents 26% of the index exposure. While the total size of new issues this year is largely in-line with 2013, there are few interesting issuance trends that we observed. First, the average outstanding par of new issues tracked by the index, is on a rising trend and approaching USD 1 billion, as shown in Exhibit 1. This increase in deal size reflected a stronger investor demand. In Read more [...]

If You’re Not in the Loans Then You’re Not Getting the Bonds

There is an axiom among the capital markets desks of investment banks that goes something like this: “if you’re not in the loans then you’re not getting the bonds”. The reasoning behind this statement is this: Other than fallen angels, the issuers of high yield debt are companies whose access to capital can be limited.  Start-up companies, whose story resonates with bankers, need to build relationships with lenders or existing companies whose line of business is highly leveraged. For Read more [...]

This Cold Is Hard To Catch

Many people are asking if we are seeing withdrawals from commodities since oil has dropped about 25% since its high in June.  While we don't track asset flows of products based off the indices, the anecdotal answer is many view this as a buying opportunity.  The IEA predicts an acceleration of oil demand growth from non-OECD countries of 2.6% in 2015 up from 1.9% in 2014 that can be mainly attributed to Asia, Africa, and the Middle East. While lower oil prices could change this, it is more likely Read more [...]