Top Research Picks of March 2023
We are excited to publish the second edition of our "Investment Research Digest" newsletter. Our editorial team has put together some interesting investment research for the month of March by international asset management firms.
Short-term Investment Grade bonds v/s cash
Inflation, interest rates, and geopolitical events have led to increased volatility and uncertainty in the financial markets, pushing investors to allocate a large portion of their portfolio to cash, however Lord Abbett says short-term investment-grade bonds might be a better option. Read more
"Investors need to take a fresh look at their asset allocation to determine if their cash holdings are really for their liquidity needs, or if the higher yields led investors to use cash as a replacement for fixed-income allocations", says Lord Abbett.
Artifical Inteligence opportunities in China
OpenAI’s ChatGPT has captured the imagination of consumers and businesses alike. Latest advancements in generative AI technology are raising investors expectations. Read more
“US-based tech companies have largely dominated the conversation around generative AI thus far, but that could change as Chinese heavyweights like Baidu enter the fray. China appears well positioned to benefit from the AI trend", says Global X.
What do recent bank failures mean?
The recent bank failures in the US Silicon Valley Bank (SVB) and Signature Bank have raised concerns for the global financial sector, with fears of a 2008-like global financial crisis, which some say is the result of raising interest rates too fast. But what does this mean for investors? Read more
“It’s most likely this collapse won’t have a contagion effect though. For a start, European banks don’t face the same sort of problems as US banks. In the US, authorities have been shoring up confidence and have guaranteed all deposits at SVB, while HSBC acquired the bank’s UK operations,” as per Invesco.
Parameters for quality investing
Sound financials of a company are a key driver for the performance of its share price, as per research over a decade by Lazard Asset Management. Read more
“Investors should be wary of buying the most expensive high-quality companies you can overpay, even for a fundamentally robust company, and you may be punished for doing so. At the same time, investors should be aware of the dangers of being seduced by very cheap valuations often companies will be cheap for a reason,” says Lazard AM.
Myths around US corporate high-yield bonds
Although rising interest rates have eroded investor confidence, some US corporate high yield bonds are giving yields of around 8.5%, presenting an attractive proposition for investors. Read More
"In our view – high yield corporate credit is emerging as an asset class to watch over the next 12 months. Last year’s repricing of the asset class means it now offers investors a more attractive yield," says Insight Investment.