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Structured finance is a large component of the U.S. fixed-income bond market and, yet, generally underweighted in many traditional fixed-income bond portfolios, in our opinion. The breadth of investment alternatives is quite large owing to the diversity of underlying collateral types and investment structures within.

The GLA Large Cap Value strategy seeks to provide total return in excess of the Russell 1000 Value Index over a full market cycle.

As an investment advisor, you understand the importance of adapting portfolio strategies to align with the ever-changing market environment. Mid-year 2024 presents a unique opportunity to reassess and potentially reallocate client portfolios. The current market dynamics strongly suggest that a shift from growth to large-cap value stocks is not only imminent but also advantageous.

As an investment advisor, assessing the strength and resiliency of various asset classes like large-cap value is crucial. The dynamics of this asset class have shifted, driven by technological advancements, changing economic conditions, and new secular themes. Recognizing these changes and their implications can help you make informed decisions to optimize your clients' portfolios.

US dollar cycled throughout the quarter, recovering in June after a large drop in May, buoyed by a hawkish adjustment to the Fed outlook along with political uncertainties in Europe and the US. Strong labor prints supported the dollar with the most recent nonfarm payrolls and hourly earnings surprising higher, at 272K vs. 180K expected and 0.4% MoM vs. 0.3% expected, respectively. Although inflation printed on the dovish side, the Fed held rates while hawkishly updating the dot plot to one cut in 2024.

Artificial Intelligence, or AI, simulates human intelligence using algorithms, data and computational power with the goal of enabling machines or software to perform tasks that typically require human intelligence.

It’s easy to be complacent about the US debt level. Since 1990, debt crises have erupted periodically (1995–6, 2011, 2013, 2021, 2023), with intense media coverage and dire predictions of economic consequences. Sometimes the crises partially shut down the government and once led to a credit downgrade (2011). But each time the crisis was resolved and forgotten. 

After 30 years in our current office space, we are preparing to move to a new historic building in Omaha that happens to be world headquarters for Berkshire Hathaway. For some, this has been light duty, but for one with 50+ years of accumulated files, it has been a much heavier lift.

“What’s past is prologue” – Shakespeare, The Tempest

Prudent risk management demands that we try to be aware of as many possible risks that exist in our companies, the market, and subsequently in our client portfolios. 

In May 2024, Bristol Gate celebrated its 15-year anniversary of our US Equity Strategy. As we did when we reached our ten-year anniversary, we thought it would be worth revisiting what has allowed us to succeed over that time, and why we believe this approach will continue to offer opportunities for many years to come.

At Bristol Gate, we focus on investing in high-quality companies that demonstrate strong potential for high dividend growth. We utilize advanced machine learning algorithms alongside the assessment from our portfolio managers to help determine a company’s dividend growth and quality characteristics.

A key challenge of investing in large-cap value stocks is that all investors have extensive access to large-capitalization company information and the thinking and strategies of their corporate management teams. There are plentiful analyst research reports, easy-to-retrieve company fundamental metrics, leadership interviews, stock tracking tools, and so on. 

The second quarter was a good one, as measured by the US Large Cap S&P 500 Index which was up 4.28%. The S&P 500 was led higher by large/mega-cap technology names, as seen in the Nasdaq 100’s 8.05% gain for the quarter. However, it was one of the more uneven markets in recent memory.

From our perspective, recent data has brought the near-term macro trajectory into clearer focus. For some time, the distribution of potential outcomes for inflation and growth was wide: it was unclear whether price pressures (and output) would moderate significantly over the next year.

The Major Trend Index held at a Neutral reading for the week ended July 26th. A second consecutive weekly decline in the S&P 500 failed to knock down our Technical composite from its bullish perch at +4.

Leuthold Select Industries is the mutual fund incarnation of our Group Selection Scores (GSS), the primary equity discipline at our firm. The GSS process employs a multi-factor approach to identify themes and groups scoring highly on characteristics that typically lead to future outperformance.

The latest CPI report was a tad cooler than consensus. Our scorecard suggests the modest disinflationary regime is likely to persist.

In the old classic 60/40 model, stocks make up the majority of the allocation. Through the end of August, that part of the balanced model has performed brilliantly, up an astounding almost 20% YTD (S&P 500 19.53%). But the risks embedded in that allocation are growing dramatically.

Here at the halfway point of 2024, the light of investment heaven shines brightly from the mountain top, even as the heat of summer drips sweat off the brow of those of us laboring to get our portfolio rocks to the top.

U.S. Treasury interest rates continued to climb in the second quarter of 2024, although more modestly than they did in the first quarter. Large rate increases across the yield curve in April were mostly reversed in May and June, leaving overall base rates 10 to 20 basis points higher at quarter end. The chart below provides a view of rates across the yield curve.

As an investment advisor, you understand the importance of partnering with trustworthy, experienced investment management firms. Your clients depend on your expertise to make informed decisions, and the choices you make for their portfolios can have long-term implications. That’s where Great Lakes Advisors (GLA) comes in—a large-cap value investment firm with a proven track record, deep industry expertise, and a commitment to putting clients first.

As an experienced investment advisor, you’re well aware that the market operates in cycles, particularly between significant asset classes like large-cap growth and value stocks. Understanding these cycles allows you to make informed decisions on behalf of your clients, adjusting allocations to align with prevailing economic conditions.

Navigating the fixed income market is becoming increasingly complex due to a range of unpredictable factors. With upcoming presidential elections and interest rate cuts [finally] a reality, the fixed income markets face significant challenges in the months ahead.

The Major Trend Index was unchanged at a High Neutral reading of +1 for the week ended November 1st. The Sentiment factors moved up a notch to -3, while numerous downgrades within the Technical work were not quite enough to knock that category’s reading down from a solidly bullish tally of +4.

A number of factors have converged to create a potentially compelling opportunity in EM debt. And with prices at attractive levels relative to history, now may be a good time to consider an allocation to the asset class.

October is often a tough month for risk assets. Some of the stock market’s biggest sell offs in history have occurred in this first full month of fall in the northern hemisphere. Credit instruments often trade in sympathy with equities, if not in lock step occasionally. 

Billions of dollars in transaction savings and economic output. Rapid payment systems pay off. Will developed countries follow the instant payment lead of developing countries?

The S&P 500’s estimated bottom-up operating EPS shrank 2% during the first month of Q3 reporting (Chart 1). A similar, slighter larger drop in the EPS estimate was experienced in July, as results were tallied for Q2’s first month of reporting. That initial Q2 deficit was recouped over the next two months and actual results eventually ended higher than what was projected at the beginning of earnings season. 

The Major Trend Index was unchanged at a High Neutral reading of +1 in the week ended November 22nd, and its four factor categories held steady at their recent levels. After a minor reduction in our tactical portfolios’ equity hedge in early November, those accounts are positioned with net equity exposure of 58%. 

It’s easy to shrug off announcements from BRICS, an organization that some view as a geopolitical rival to the US and its allies.

The HCM Technology M&A market is experiencing resilient transaction volumes in 2024 following a drop off in 2023 due to improvements in macro-economic conditions including unemployment and inflation rates that affected public markets across the globe.

Current yields and total return prospects are presenting an attractive case for IG credit—but a global and flexible approach is key to capturing the diverse range of potential opportunities to generate alpha.

Against a backdrop of reduced values, resilient fundamentals, and the prospect of lower financing costs, potential opportunities are emerging across the U.S. real estate market. But given the uncertainties remaining, caution remains key.

The popularity of perpetual BDCs and speed of capital raise for some has made it harder for certain managers to selectively deploy capital into true middle market deals—leading to “style drift” that can expose investors to unwanted risks.

The developed APAC direct lending market is relatively nascent compared to the U.S. and Europe but offers similar risk and return characteristics—with the added benefit of diversification and access to a compelling global growth opportunity.

The European real estate market is at the beginning of a new property cycle. Although the landscape is not devoid of risks, there are three key reasons why real estate debt presents a compelling investment opportunity—but a selective approach across sectors is crucial.

EM local debt has historically offered higher yields than the comparable U.S. risk-free rate, and recently has begun to exhibit more stability as well—which presents a compelling case for investors.

Another year in the proverbial books. Looking back on 2024, there have been quite a few surprises.  The U.S. economy remained resilient despite the "experts" calling for an imminent recession. Stock indexes registered new highs as AI (artificial intelligence) fever seemed to promise endless prosperity.

Happy New Year! As we reflect on 2024, we entered the year with modest expectations amid a complex and uncertain environment. The stock market, however, demonstrated resilience, delivering strong results. Artificial Intelligence (AI) was a key focus for investors and stock index returns were skewed by outsized returns on a handful of megacap tech stocks.

It is possible that value investing is genuinely dead, as a few have surmised. To our knowledge the coroner has not yet issued a final report, but the evidence is mounting. In the collection of evidence, we continue to note the valuation chasm between cheap and expensive companies in U.S. equity markets. This phenomenon is not unprecedented, but the current iteration grew gapingly large and seems unusually persistent.

Once a part of the structural foundation of equity markets, the community of value-oriented boutiques has been significantly impacted by these distortive phenomena. It is indeed a business strategy offering little insulation from these challenges. A number of firms have closed, while some others have adjusted their strategies to be more in keeping with the present investing zeitgeist. 

The Major Trend Index was unchanged at a Neutral reading of zero in the week ended January 31st. The leading Technology stocks have so far managed to shrug off the sudden emergence of an ultra low-cost competitor to existing AI models. In fact, our weekly Chart Scores for both the NASDAQ Composite and NYSE FANG+ Indexes remain at maximum bullish levels. 

Question: “What do the stock market and my wife have in common?”
Answer: “They’re both always right!”

The market optimism that defined the past two years could be starting to fade, with investors growing increasingly wary of elevated stock valuations and macroeconomic and policy uncertainty. Bearish sentiment among individual investors reached its highest level since 2023, fueled by concerns over trade policy shifts, persistent inflation, and dwindling expectations for interest-rate cuts1.

Closed-end funds (CEFs) remain an attractive investment vehicle for sophisticated investors seeking income, diversification, and market inefficiencies that can be exploited for additional returns. 

As we have discussed previously, closed-end funds (CEFs) offer a compelling investment opportunity for investors seeking income, diversification, and exposure to alternative asset classes.

Market inefficiencies within closed-end funds (CEFs) create compelling opportunities for sophisticated investors seeking to capitalize on pricing discrepancies and generate alpha.

While market inefficiencies in closed-end funds (CEFs) create opportunities, accessing and optimizing these opportunities requires skill, research, and active management.