Navigating Market Complexities: Insights from the Trading Desk | EP172
Release Date: 11/26/2024
Quarterly Update | Q4 2024 | EP178
Art of Boring
In this episode, we discuss 2024's economic landscape and what to expect in 2025, with Crista Caughlin, lead portfolio manager of the Mawer Canadian bond strategy. Crista highlights U.S. and Canadian growth trends, central bank rate adjustments, housing market dynamics, equity and fixed-income performance, and political uncertainties. She also discusses Mawer’s asset allocation strategy, balancing risks with opportunities amidst shifting fiscal policies, trade tensions, and global economic developments heading into 2025. Key Takeaways: The year 2024 saw resilient U.S. growth despite...
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Canadian Equity: 2024 Overview and Looking Ahead to 2025 | EP177
Art of Boring
In this episode we discuss the Canadian equity market with Mark Rutherford, co-manager of Mawer’s Canadian equity strategy. Mark highlights the key drivers behind Canadian equities' strong 2024 performance, highlighting standout sectors like technology, financials, energy midstream, and gold. He also examines challenges in telecommunications and real estate, discusses risks from slower economic growth, inflation, and higher mortgage rates, and emphasizes strategic portfolio adjustments. Key Takeaways: Canadian equities excelled in 2024, driven by strong performance in technology,...
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Why Invest Outside of the U.S.? The Benefits of EAFE Large Cap | EP176
Art of Boring
In this episode, we discuss Mawer’s EAFE large cap portfolio with Ian Turnbull, an equity analyst at Mawer. Ian explores the portfolio's diversification benefits, offering exposure to resilient, high-quality companies in 21 markets such as the Nordics, Switzerland, and Singapore. The team targets proven companies with strong moats and global leadership. Key holdings include Wolters Kluwer, BAE, and Chugai. AI's potential in healthcare R&D is highlighted, though regulatory hurdles persist. The team emphasizes balancing risks, leveraging themes like pharma innovation, defense,...
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Maintaining an All-Weather Strategy: The U.S. Mid Cap Equity Landscape | EP175
Art of Boring
In this episode, we discuss the U.S. mid-cap landscape with Jeff Mo, manager of the U.S. mid cap equity strategy at Mawer. Jeff touches on risk management, emphasizing disciplined adherence to investment philosophy and the benefits of balancing risk and return through natural contradictions, like pairing discretionary consumer-focused SharkNinja with countercyclical firms such as FTI Consulting. Additional topics include preemptive risk management, maintaining an all-weather portfolio, and leveraging a robust inventory process to adapt. Key Takeaways: In a hot market, risk management means...
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Opportunities and Watchpoints: A Deep Dive into Global Credit | EP174
Art of Boring
In this episode, we discuss key trends and positioning in credit markets with Brian Carney, lead portfolio manager of the Mawer global credit opportunities strategy. We touch on the year’s strong performance driven by tighter spreads, higher yields, and emerging risks such as low risk premiums and the U.S. election. Topics include corporate issuance, fallen angels, and public-private credit convergence. Emphasizing capital preservation, Brian highlights portfolio positioning in high-quality, short-duration securities, such as North American bank bonds, while avoiding high-yield exposure. ...
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The “S&P 493”: Managing Risks and Opportunities in the Global Equity Strategy | EP173
Art of Boring
In this episode, we discuss the global equity strategy with Christian Deckart, chief investment officer and portfolio manager at Mawer. Christian stresses managing absolute risk over relative risk for better long-term outcomes and details Mawer’s approach to risk management, focusing on decision-making, portfolio risks, and external factors such as government debt and rising rates. He also discusses adapting to AI trends, preferring companies leveraging AI applications over infrastructure investments. He emphasizes maintaining focus on fundamentals amid evolving global and technological...
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Navigating Market Complexities: Insights from the Trading Desk | EP172
Art of Boring
In this episode, we discuss market insights with two representatives from the trading desk: Rita Tien, who trades the Americas from Toronto, and Peter Dmytruk, who trades Asia from Singapore. Rita and Peter highlight the complexities of trading, emphasizing the importance of regional differences and the role of the trading desk in executing investment decisions. They discuss the impact of the Japanese carry trade, the shift to T+1 settlement cycles in the U.S. and Canada, and the influence of ETFs and retail investors on market volatility. They also touch on the role of multi-strategy hedge...
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Banks Around the World: What Makes Top Financial Institutions Stand Out | EP171
Art of Boring
In this episode, Mawer portfolio managers and analysts discuss what they fundamentally look for in a bank as an investment. Specifically, how they view banks and the industry trends, as well as local dynamics, and ultimately what makes each of these businesses both unique and attractive. David Ragan discusses Scandinavian banks, highlighting Handelsbanken's smart lending and DNB's stability. Josh Samuel analyzes DBS in Singapore, emphasizing its low cost of funds and high ROE. Grayson Witcher focuses on J.P. Morgan in the U.S., noting its strong management and unique financial assets, while...
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China in Focus: Traversing the Emerging Markets Landscape | EP170
Art of Boring
In this episode, Peter Lampert, lead portfolio manager of the International Equity Strategy, discusses the recent Chinese stimulus and its effects on emerging markets. He highlights key long-term risks in China, including weak sentiment, regulatory challenges, and geopolitical tensions, while emphasizing the potential of companies like Tencent and Tencent Music. The conversation also covers Turkey's Bim, a discount retailer thriving amid economic uncertainty. Peter explains how the portfolio's success stems from stock selection, especially with stealth performers like Vietnam’s FPT and...
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Looking Past the Pitfalls: Focusing on Managing Risk in the Balanced Portfolio | EP169
Art of Boring
In this episode, Steven Visscher, lead manager of the balanced strategies, discusses the impact of rising interest rates and inflation on the balanced portfolio in recent years, Mawer’s disciplined and collaborative approach to portfolio construction, and the importance of having a long-term perspective. He spoke about recent changes and additions to the balanced portfolio and provided an update on the performance of the balanced portfolio thus far in 2024. Key Takeaways: Over the last four years, interest rates and inflation have had the most significant impact on the capital markets and...
info_outlineIn this episode, we discuss market insights with two representatives from the trading desk: Rita Tien, who trades the Americas from Toronto, and Peter Dmytruk, who trades Asia from Singapore. Rita and Peter highlight the complexities of trading, emphasizing the importance of regional differences and the role of the trading desk in executing investment decisions. They discuss the impact of the Japanese carry trade, the shift to T+1 settlement cycles in the U.S. and Canada, and the influence of ETFs and retail investors on market volatility. They also touch on the role of multi-strategy hedge funds and the challenges of managing market risks. The conversation underscores the need for long-term investment strategies and the importance of understanding market structures and dynamics.
Key Takeaways:
- The trading desk plays a critical role in executing investment decisions effectively, navigating market nuances and regional differences.
- Market events like U.S. elections and Fed rate decisions significantly impact markets, requiring traders to discern meaningful signals from noise. While short-term volatility is challenging, the focus remains on executing trades aligned with long-term strategies.
- The Japanese carry trade impacts markets, influencing businesses and structured products. Sudden market moves, like Japan's interest rate hike, highlight the importance of communication to assess potential impacts on investment theses.
- In the U.S. and Canada, the shift to T+1 settlement reduces settlement risk and margin requirements by accelerating fund transfers but adds complexity for global trades due to mismatched settlement cycles.
- Market volatility is influenced by zero-day options, high-frequency trading, retail investor activity, and leveraged ETFs. Retail-driven markets such as India, Korea, and Taiwan showcase momentum-driven dynamics, while recent SEC rules aim to protect retail investors and improve liquidity access for institutional players.
- ETFs significantly influence market dynamics, concentrating liquidity and volume, especially during closing auctions, where up to 20% of daily trading occurs. This impacts trade timing, crowding in top-weighted stocks, and creates potential price distortions affecting subsequent trading days.
- Multi-strategy hedge funds, or "pod shops," drive market overcrowding by leveraging similar strategies, such as M&A arbitrage or index rebalancing. This amplifies market risks, creates volatility during downturns, and provides opportunities for disciplined long-term investors amid rapid shifts.
- Crowded, momentum-driven trades fueled by leverage and quantitative models can create challenges for disciplined investors, though opportunities arise in volatility. Balancing exposure to popular names with underappreciated companies can mitigate risks while benefiting from structural market inefficiencies.
Host Name and title:
Rob Campbell, CFA
Mawer Institutional Portfolio Manager
Guest names and titles:
Peter Dmytruk, CFA, P. Eng.
Trader
Rita Tien
Equity Trader
For more details and full transcript visit: https://mawer.com/the-art-of-
This episode is available for download anywhere you get your podcasts.
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Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.
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