Research and Commentary

A Clear Perspective and Point of View

About Global Market Outlook Reports

Q3 Market Outlook: A Late 2019 Performance Pivot to Non-US Markets?

Despite a rocky mid-point, precipitated by the infamous "tweet heard around the world" on May 5th, when President Trump once again pivoted to a more bellicose stance in the trade war with China, global equities eked out a solid gain of 3.6% during 02. Coincidentally,...

About Global Market Outlook Reports

Our CIO, Tina Byles Williams, publishes our market outlook on a quarterly basis, based on research that examines market conditions over a three- to six-month period. These quarterly analyses serve as key inputs to our fund construction process, which incorporates strategic tilts to the market segments we believe will outperform over a six- to 12-month time frame. For global equity portfolios, these tilts incorporate regional, sector, and capitalization strata as well as investment process and style factors. For U.S. equity portfolios, tilts include sector, capitalization strata, investment process, and/or style factors.

Our objective is to construct a portfolio of “best in class” investments with weightings consistent with our overall investment strategy.

FIS Group Global Market Outlook Reports

Q1 2017: Who Knows? Navigating the Known Knowns and Underappreciated Knowns In Current Market Consensus

Our Q1 2017 Global Market Outlook, Who Knows? Navigating the Known Knowns and Underappreciated Knowns In Current Market Consensus, examines vulnerabilities in the bullish consensus narrative underpinning global equity markets. The key vulnerabilities discussed are U.S. dollar appreciation, elevated U.S. Small Cap valuations, questionable assumptions behind the bullish narrative on EM equities, as well as gathering geopolitical risks.

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Goldilocks is On life Support: Gathering Policy Headwinds and Monetary Policy Exhaustion

Our outlook looks at global equity markets, earnings, emerging markets, and currencies through the end of the year in the face of another interest rate hike in December and impending political events in the U.S. and Europe. We also evaluate the longer term macroeconomic and investment strategy implications of impending monetary policy exhaustion and resurgent populism in a piece entitled: Goldilocks is on Life Support: Investment Strategy in Light of Monetary Policy Exhaustion and Resurgent Populism

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The Revenge Of The Precariat Over Davos Man

The turmoil that erupted after the June 23rd Brexit referendum has purportedly prompted many people who voted “Leave” to rethink their decision. New PM Theresa May has stated that “Brexit means Brexit,” dimming hopes that the referendum’s results would be reversed; but also inferring that Article 50 will not be invoked until next year. May has also appointed a number of prominent Brexit supporters to her cabinet,
with David Davis heading the new “Brexit Ministry” and Boris Johnson installed as the Foreign Secretary. These pronouncements and appointments could indicate that she has succumbed to Brexit (despite her earlier opposition) or it could be a shrewd political strategy to allow its economic and political consequences to hit home with voters and force her former rivals to “own” the fallout if and when the public turns on Brexit and its proponents. If future opinion polls show that a decisive plurality of UK voters favor remaining in the EU, this would give the British government the excuse necessary to call for a second plebiscite.

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Q1 2016 – Equities Elude The Four Horsemen…Again!

The upsurge in equity prices that started on March 10, 2009 has been among the most despised and distrusted bullmarkets of all time. For each of its seven years, newfound horror stories materialized to interrupt the bull trend with corrections roughly as large and as scary as the one which began this year. In 2009 the S&P 500, still reeling from the aftermath of the GFC, declined by 25% through March 9, 2009. In 2010, fear over the U.S. deficit set off a -15 % correction. In 2011, panic over a U.S. Treasury default sent the S&P down
-19.5%. In 2012, the euro crisis caused two corrections, -10% in the spring and then -8% in the autumn. In 2013, the panic was about Federal Reserve tapering and a U.S. government shutdown, although these only hit the S&P by -6%. In 2014, carnage in the Middle East and Ukraine catalyzed an -8% setback. And last summer, policy blunders in China caused a correction of -12%. Importantly, each of these corrections turned out to be a buying opportunity.

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Outlook For Frontier Markets

Similar to most other major global markets, 2015 was also largely a year to forget on the frontier. The few bright spots of meaningfully positive local returns (Argentina and Romania) were largely overwhelmed by further currency weakness relative to the U.S. Dollar. Looking ahead for 2016, we see a global sense of skittishness and thin growth leadership as extending to the frontier markets as well, though their lesser lack of integration and correlation with global markets will separate some markets more than others. To that end, the asset concentration within the small universe of global frontier markets managers is our top concern across frontier markets for 2016. Thus at the broadest level, we recommend underweighting global frontier markets vis a vis other clearer opportunities in Japanese equities, but see some genuine opportunities in the frontier universe relative to emerging markets. Otherwise our views here largely reflect our recommendations for medium-term allocations within the frontier universe. As in emerging markets, we expect U.S. dollar strength to continue, and indeed may even be exacerbated by local currency weakness in selected markets (e.g. Nigeria). Saudi Arabia and the rest of the GCC are making headlines for their regional confrontations, both hot and cold, fiscal struggles and influence in the oil market, but also for some peculiar reforms to the stock market. Nigeria is both cheap and expensive in different parts, and could be poised for a truly volatile 2016. Indeed much of the big African stocks seem expensive compared to their European, Asian, or Latin American counterparts, and these stocks seem poised at best for stagnation in 2016 and possibly a significant de-rating. But the universe is not without its bright spots and we see very positive macro fundamentals and micro market catalysts in Argentina, Vietnam, and Frontier Europe (ex Kazakhstan).

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2015 In Review – A Forgettable Year

For the most part, 2015 was a forgettable year as growth anemia and disappointment, enduring characteristics of the post GFC period, continued. At 3.1%, global growth once again underperformed IMF forecasts from October 2014 with most of the disappointment emanating from the Emerging world that is most exposed to the slowdown in China and the end of the commodity super-cycle. With notable exceptions of commodity producers such as Brazil and South Africa, inflation also underperformed the 2014 forecast, underpinned primarily by weak demand and the precipitous decline in commodity prices.

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Market Insights Alert

Papers: FIS Group Proprietary Research

Whither the GEM manager?

The global integration of Chinese equity markets portend a significant structural transformation in the way allocators and managers approach global emerging markets investing over the next five years. In this next Market Insight Alert, we look at: The future...

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Momentum: Beware of the Double-Edged Sword

This paper analyzes situations where momentum can be either a significant tailwind or exacerbate risks and undermine portfolio diversification. The Special Report looks at historical data and focuses on four key points.

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Beyond Brexit

Last night’s Brexit vote reiterated just how out of touch financial and political elites in the UK are with the mass population. Fears of similar class polarization now cast their gaze on the recent rise of similar isolationist political movements elsewhere in Europe...

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Videos And Webinars

Market Outlook and Research Webinars

Ecosystem Webinar Presentation

Facilitating opportunity
• Grow and diversify the pool of talented entrepreneurial managers to the benefit
of the asset management industry
• Support entrepreneurial efforts of talented investment managers
• Increase FIS Group’s first mover track record from 25% to 50%
of all funded firms
• Funded entirely by revenue generated from
FIS Group’s core business
• Services provided at no cost to the managers

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From Versus to Versatilit​y: Exploring the Cyclicalit​y of Active & Passive Management

Panelist Information: N/A
Duration: 51 minutes
Description: This interactive webinar discussion will be led by FIS Group’s Founder and CIO, Tina Byles Williams. The discussion will highlight the actionable implications from our recently published white paper entitled, “Is Active Equity Management Alpha on Permanent or Temporary Disability?” Additionally, the paper’s models have been updated for this discussion, and Tina will reveal whether the updates had a significant effect on the original conclusions. Tina will close this webinar by providing participants with a peek at what FIS Group’s market and risk models are forecasting for 4th Quarter.

The topics to be discussed during the webinar include the following:

• Evidence pointing to the cyclical nature of periods when either active or passive management are in favor rather than a permanent “new normal” where active U.S. large-cap managers struggle to beat their benchmarks;

• Updates on several of the conclusions published in the original paper and their implication for active managers in a time of anticipated Fed tapering and slowing of corporate profit growth;

• The uncertainty of whether the ‘Risk On, Risk Off’ trading environment of the last five years will persist or give way to a renewed premium on stock picking;

• FIS Group’s forecast for the 4Q 2013 market environment and our view on investment opportunities for capital allocators and equity managers for the remainder of the year.

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