Perspectives Blog

Asia’s emerging markets – Room to run

Dara White, Senior Portfolio Manager | November 10, 2014

As emerging markets investors, we like Asia because of its strong reform momentum and the depth of its stock market. Rising interest rates will be good for exports and Asia’s earnings story. Valuations, inflation rates and current accounts are at levels close to where they were from 2001 to 2005, the best period for emerging markets. Excerpted from Barron’s November 3, 2014 cover story in which Dara White and three other EM experts discuss opp…

Slow growth: Why is it here and will it stay?

February 24, 2014

There is no consensus on the root causes of slow growth. As economists seek explanations, the secular stagnation theory has re-emerged. Strong evidence suggests the neutral real rate has fallen. (But is it negative? We explore this question in this continuing series over the next few weeks.) By Marie Schofield, Chief Economist and Toby Nangle, Head of Multi Asset Allocation The idea that economies may be undergoing a long period of slow growth…

Another look at disability and labor force participation

Zach Pandl, Portfolio Manager and Strategist | April 7, 2014

In searching for explanations for the steep decline in the U.S. labor force participation rate analysts have rightly stressed the importance of retiring baby boomers. Increase in disability share accounts for 20-25% of the drop in the labor force participation rate since 2007 (vs ~45% for retirements). We expect this shift to be essentially permanent, but growth in the disability share will also probably slow down. In searching for explanation…

How plan sponsors can plan for the coming changes to mortality tables

Thomas Egan, Actuary, Liability Driven Solutions Team | September 22, 2014

RP-2014 mortality tables are expected to increase the average pension plan’s liabilities by 3% to 10%, with a similar reduction in funded status. Revised tables will be recognized first by plan sponsors’ accountants, and subsequently by the IRS. Plan sponsors should work with their advisors, investment managers and actuaries to develop a response tailored to their pension funding strategy. The name may sound like something from Star Wars, but…

Specialty pharmaceuticals – The fastest growing category of healthcare spending

Harlan Sonderling, CFA, Senior Healthcare Analyst | January 27, 2014

A complex industry has developed to manage the delivery and costs of the therapeutic innovations in specialty pharma Healthcare payers are focused on managing specialty pharma spending, their most rapidly growing medical cost The accelerating pace of change and disruptive therapeutic advances create significant opportunities across healthcare delivery Pharmaceuticals are central to the effort to improve medical outcomes and control medical cos…

How will California’s drought affect water utility revenue bonds?

Ty Schoback, Senior Municipal Analyst | November 5, 2014

 California is in its fourth year of drought, one of the worst in the past century.  Key factors when assessing credit quality of water utilities are water supply and source diversity.  Credit strength of California water utilities hinges on political willingness to raise rates.  Potential impact on California-specific and national muni bond funds. California is in the midst of its worst dry spell in the last one hundred years. For most water…

Neutral funds rate going up?

Zach Pandl, Portfolio Manager and Strategist | May 16, 2014

The idea of low neutral funds rate has surprising currency, but could erode with more evidence of solid growth. We believe incoming information suggests the neutral funds rate would be moving higher, not lower. We see neutral funds rate at 3.75-4.00%, which implies an overvalued Treasury market. The hottest topic in the bond market at the moment is the idea that the “neutral funds rate”—where the Fed will rest short-term interest rates when th…