Factor-Based Investing

Will 2030 DC plans perform better at preparing U.S. workers for retirement?

The healthcare sector offers a compelling mix of defensive characteristics and growth potential driven by innovation. It also features ample dispersion that presents stock pickers with an opportunity to parse potential leaders and laggards in pursuit of above-market return.

With US payroll and unemployment data surprising to the downside two Fridays ago, Treasury markets quickly repriced the probability of impending recession, helping set off a volatility spike in stocks across the world. According to Bloomberg, economists’ consensus probability of a US recession in the next twelve months is now approximately 30%.

My colleague Will Keenan recommended an outstanding book, The Professor, the Banker, and the Suicide King, by Michael Craig. The book is a short and entertaining read of how Andy Beal played the best poker players in the world heads-up. He not only gambled toe-to-toe, but he also reminded them that they were doing what everyone should think poker is: gambling.

This week we take a not-so-random walk through the data, trying to simplify what is actually a fairly complex subject. I think it is quite fun, but also important. Let's dive in.

Our outlook on the 11 S&P 500 equity sectors.

After market expectations spiked to nearly five interest rate cuts in 2024 based on disappointing labor market report early in the month, reassuring data in the form of Retail Sales and Unemployment Claims have quelled market Markets have eased expectations for interest rate cuts, pricing closer to four cuts as of the end of last week.

Since our last update of the Three Tactical Rules on June 25, 2024, equity markets have retraced most of the rally from the spring. The change in market sentiment came abruptly, due to the labor market showing signs of weakness as the number of jobs available per unemployed worker fell to 1.2 and the unemployment rate rose to 4.3%. The recent market volatility has had a dramatic impact on our tactical rules.

Amid expectations of rate cuts from major central banks, managers are increasing their exposure to more cyclical and value-oriented names, including autos, transportation, and short-cycle industrials.

Since the end of the financial crisis, economists, analysts, and the Federal Reserve have continued to predict a return to higher levels of economic growth. The hope remains that the Trillions of dollars spent during the pandemic-driven economic shutdown will turn into lasting organic economic growth.

Are the “Mega-Cap” stocks dead? Maybe. But there are four reasons why they could be staged for a comeback. The recent market correction from the July peak certainly got investors’ attention and rattled the more extreme complacency.

Silver is an important component of solar photovoltaic (PV) panels, meaning that for China to reach its ambitious climate targets, it must import massive amounts of the white metal. In June alone, China spent over $228 million on silver, a new monthly record based on Bloomberg data going back to 2009.

Value has been in a protracted slump versus growth for years, but it’s been undergoing something of a makeover during that time.

Because there is unprecedented use of the word “unprecedented,” we thought it appropriate to expand our annual Charts for the Beach from 5 charts to 10 charts and tables this year. So, probably best to stay under the beach umbrella as you read our unprecedented extended edition.

Friday’s jobs report has put a damper on economic sentiment for the moment. But much hype has been made about the so-called “Great Rotation.”

Andy Rothman provides four reasons why he’s stubbornly convinced that Xi Jinping will eventually overcome his stubbornness and make the changes necessary to put China back on track to reach its potential growth rate.

Economist Claudia Sahm developed the “Sahm Rule,” which states that the economy is in recession when the unemployment rate’s three-month average is a half percentage point above its 12-month low.

During each speculative run-up in asset prices – whether the dot-com bubble, the housing bubble, or more recently the rapid rise (and fall) of the stocks of electric vehicle companies – there’s typically a moment when Wall Street strategists, analysts, and investors go all-in on that theme.

Recent macroeconomic and geopolitical developments, along with shifting AI sentiment, have raised concerns over whether strong headline returns, low volatility, and persistent mega cap tech leadership can continue as we look ahead.

The strong currency is neither a blessing nor a curse.

Never before in my history studying the Federal Reserve (Fed) has the Fed’s policy come into question immediately following the Fed decision.

Today’s passive index investing requires active choices, as customization and innovations in index funds have resulted in new considerations for investors and the potential for greater control.

I chaired an international economics conference in Canada earlier this month. Delegates from all over the world attended to discuss the issues of the day. Following is an abridged version of the meeting summary that I offered during the closing session.

Our outlook on the 11 S&P 500 equity sectors.

President Joe Biden’s withdrawal and endorsement of Vice President Kamala Harris has sent shockwaves through the political establishment, and while former President Donald Trump remains the frontrunner, the wind has certainly shifted in Harris’s favor.

As we approach the end of the fiscal year, investors should be focusing on the Treasury General Account as one factor of many that may impact global liquidity, and in turn, market performance in the coming two quarters.

The Momentum factor picked up where it left off at the end of the first quarter, turning in another standout performance in the April-through-June timeframe and ending the second quarter as the factor most relevant to positive performance.

The small cap rally has primarily been a de-risking event. It's unclear at this point whether it’s just a blip or the beginning of a new trend in market leadership.

It's been another strong first half for the U.S. ETF industry, with overall flows set to challenge or surpass historic records.

The second quarter began with inflation concerns causing a negative return in April, but improved inflation led to a more hopeful market in May and June, with AI and semiconductor stocks leading.

Qraft Technologies took AI-driven investment products to the next level with the launch of the LG-QRAFT AI-Powered U.S. Large Cap Core ETF (LQAI) in November of 2023. The firm partnered with LG AI Research, an artificial intelligence (AI) research hub of South Korea's LG Group, to create LQAI.

While it's too early to declare small caps' recent outperformance as a meaningful trend shift, we continue to think high-quality companies and industries will likely perform well.

Warren Buffett's continued focus on US industrials reflects their strong economic moat, high profitability, and attractive valuations, aligning with his value investing principles and offering substantial growth potential. Macro tailwinds make the opportunity especially compelling.

The stock market is not a balloon that gets bigger when money “flows into” it. It doesn’t get smaller because money “flows out” of it. Holding the number of shares constant, the stock market gets bigger if investors pay a higher price for those shares. Period.

Explaining Strong Returns in the Face of Value Headwinds.

It's important to understand the true meaning behind the names of investment funds, especially when it comes to those labeled "tax-managed"

Elections have been anything but easy for investors. What has been easy is financial conditions in the US relative to the level of policy rates, fostering the debate over the degree of policy restrictiveness as global monetary easing begins.

On the latest edition of Market Week in Review, Investment Strategist BeiChen Lin and Regional Director Chris Kalman discussed the highlights from June’s U.S. inflation report.

The S&P 500 posted a near-perfect week, with gains every day except Thursday.

Many people want the passive income that can come with rental properties, but they come with risks and responsibilities.

Heading into the second half of 2024, it appears the markets are no longer focusing on the odds for a recession.

As we survey the economic landscape, we are reminded of Otis Redding’s classic hit, which is all about patience. “Looks like nothing’s gonna change, everything still remains the same.”

I have been looking forward to writing this blog for a long time. I joined Russell Investments on July 12, 2004 and now that it is my 20th anniversary, I feel it’s the right moment to share some of what I have learned along the way.

After a fruitful career and plenty of practice paying taxes, you may feel prepared for the tax man in retirement. But a review of your post-retirement taxable income may yield some surprising insights.

A strategic alignment within the workplace is an opportunity for financial advisors, employers and retirement savers seeking financial planning advice. See Kevin Murphy’s views on emerging trends in workplace savings.

While the temperatures were rising, the U.S. stock market continued its climb higher as well. The S&P 500 returned 3.5% and Emerging Market stocks delivered an impressive 3.9%. Bonds also returned positively in June.

In the week ending on June 3, the SPDR S&P 500 ETF Trust (SPY) rose 1.09% while the Invesco S&P 500® Equal Weight ETF (RSP) was down 0.13%.

Wall Street analysts continue significantly lowering the earnings bar as we enter the Q2 reporting period. Even as analysts lower that earnings bar, stocks have rallied sharply over the last few months.