Should investors dig big data?

New digital business models are creating a torrent of data volume growth from new sources. In 2014 IBM estimated that 90% of the world’s data had been generated in just the past two years. This explosion in ‘big data’ is creating new opportunities for companies that can monetise the data they collect, store and analyse from sources like social media and e-commerce transactions.

These positive changes are not happening in a vacuum, however. The large, legacy technology vendors still have considerable home-field advantages, including access to large sources of capital and an ability to lock users and their data into proprietary ecosystems. Given the shift to the cloud, we view open source technology and its ability to reduce the friction from moving data between systems as a key, new opportunity.  We also believe the mergers & acquisitions cycle will continue as a competitive response from these large, legacy technology vendors.

Rob Zeuthen – The Boston Company Asset Management, A BNY Mellon company

New digital business models are creating a torrent of data volume growth from new sources. In 2014 IBM estimated that 90% of the world’s data had been generated in just the past two years. This explosion in ‘big data’ is creating new opportunities for companies that can monetise the data they collect, store and analyse from sources like social media … read more

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Why hold gold now?

Many of the polemics surrounding gold involve a comparison with equities. If you are pro-gold, many believe you are anti-stocks, anti-innovation and anti-prosperity. However, we see gold as a non-yielding real asset that should act like a ‘safe-haven’ currency.

Gold, in our view, is no way comparable with a risk asset which has a claim on the future cash flows from commerce; neither should gold be grouped with commodities consumed to create economic activity.

Persistent use of loose monetary policy to tackle structural headwinds to global growth also means the money many assets are denominated in is increasingly risky. This is of key importance to the absolute return investor. In an environment of increasing paper currency devaluation, debasement and volatility, it can make sense to denominate a portion of one’s portfolio in a monetary asset outside the current credit driven financial system as a means of diversification. Nation states continue to hold gold as part of their reserves as long-term financial insurance – it doesn’t seem unreasonable to us for investors to do the same.

Iain Stewart – Newton, a BNY Mellon company

Many of the polemics surrounding gold involve a comparison with equities. If you are pro-gold, many believe you are anti-stocks, anti-innovation and anti-prosperity. However, we see gold as a non-yielding real asset that should act like a ‘safe-haven’ currency. Gold, in our view, is no way comparable with a risk asset which has a claim on the future cash flows … read more

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EM currency snapshot: The right time to buy?

Emerging market currencies are getting hit by three secular trends all at once: the drop in commodities prices (for commodity exporters), the drop in global growth expectations and negative capital flows away from emerging economies.

The early August devaluation of the Chinese renminbi (CNY) on its own appeared relatively benign. However the combination of the nearly 2% devaluation with the above forces, the added  political dimensions and the on-going uncertainty on Chinese GDP growth led to a spike in volatility across emerging market currencies.

In contrast to the fixed exchange rate band for the renminbi (CNY), the free-float South Korean won (KRW) provides a useful barometer of EM Asia currencies. We can see how the won (KRW) volatility term structure responded similarly to initial renminbi (CNY) devaluation. But contrary to the offshore renminbi (CNH), the expected volatility of the KRW has since risen further – signalling that market participants anticipate even more exchange rate volatility in the coming months.

Sam Valtenbergs – Mellon Capital, a BNY Mellon company

Emerging market currencies are getting hit by three secular trends all at once: the drop in commodities prices (for commodity exporters), the drop in global growth expectations and negative capital flows away from emerging economies. The early August devaluation of the Chinese renminbi (CNY) on its own appeared relatively benign. However the combination of the nearly 2% devaluation with the … read more

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Can active ever beat passive again?

During the five years of quantitative easing the Federal Reserve (Fed) achieved its goal of creating a wealth effect as interest rates plummeted to multi-decade lows while equity and bond markets appreciated considerably. However, this caused equities to move increasingly in tandem, making effective stock-picking more challenging.

Now, with the Fed signalling potential interest-rate hikes in late 2015/early 2016 the environment is ripe for active managers to show their worth once more. In fact, 65% of active US large-cap funds outperformed their benchmarks during the first quarter of 2015, which may represent a meaningful inflection point for performance trends.

As stock correlations descend, performance dispersion is expected to widen across sectors highlighting the level of inefficiency across companies which can be exploited through selecting winners and avoiding losers and give a greater alpha opportunity for active managers.

George Saffaye – The Boston Company Asset Management, a BNY Mellon company

During the five years of quantitative easing the Federal Reserve (Fed) achieved its goal of creating a wealth effect as interest rates plummeted to multi-decade lows while equity and bond markets appreciated considerably. However, this caused equities to move increasingly in tandem, making effective stock-picking more challenging. Now, with the Fed signalling potential interest-rate hikes in late 2015/early 2016 the … read more

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The coming boom in EM healthcare

For six of the past nine years, health care has been among the top-five performing industry sectors globally. While historically most of this performance may have come from the developed world, a rising middle class and increasing disposable incomes in emerging markets are creating significant demand for healthcare, and we believe this is likely to provide a great opportunity for the sector for many years to come.

Currently, we seek to take advantage of rising disposable incomes and the current low levels of both government and consumer spending, with holdings in a number of private hospital operators across a number of countries, including South Africa, Malaysia, India and the United Arab Emirates.

We also hold some innovative domestic pharmaceutical companies, which we believe have sustainable advantages over their international competitors.

Rob Marshall-Lee – Newton, a BNY Mellon company

For six of the past nine years, health care has been among the top-five performing industry sectors globally. While historically most of this performance may have come from the developed world, a rising middle class and increasing disposable incomes in emerging markets are creating significant demand for healthcare, and we believe this is likely to provide a great opportunity for … read more

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