Indexing On The Rise
According to Morningstar Inc., passive U.S. equity funds are set to overtake their active peers in 2019. While we are believers in passive mandates, particularly for broad equity exposure, we believe this trend will create an increasing advantage for active managers in certain segments of the market. One area that is becoming increasingly interesting is in small/micro capitalization equities, where an exodus of institutional research coverage and decreasing number of active managers is creating opportunity for investors that remain focused on the space.
British journalist, Johann Hari, spent three years researching the war on drugs and questioning the ways in which we treat addiction.
With mental health services struggling to keep up with demand, we felt it was important to highlight this TED Talk as Johann describes his personal experience watching loved ones struggle to overcome their addictions, yet ultimately fail using current methods. He wonders if there is a better way, and discusses some hopeful and surprising findings from his research.
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Modern capitalism is under attack . In his most recent post, Ray Dalio highlights how ‘capitalism is not working for the majority of Americans’ and diagnoses why the system is producing inadequate results. With income inequality producing significant political, and in some cases physical, conflict in many parts of the developed world, we felt it was a good time to share what Ray believes can be done to reform capitalism. We don’t necessarily agree with every one of his ideas, but certainly applaud the efforts to start an informed conversation.
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In June 2008, Harry Potter author J.K. Rowling offered some very insightful advice to ‘dreamers and overachievers’:
You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all – in which case, you fail by default.
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With heightened valuations as a starting point, record amounts of cash on the sidelines, and leverage ratios at historic highs, we believe a discerning approach to any private equity allocation is appropriate at this time.
In her latest piece, Christine Idzelis from Institutional Investor, highlights the innerworkings of the private equity industry today, the prevalence of covenant–lite loans, and the likelihood that “the people making overleveraged loans with very weak covenants” are likely the ones that are going to be left holding the bag.
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