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Oil Inventories Just Did Something Not Seen Since 1996

One of the more interesting developments in the oil markets is the fact that oil inventories have not had their seasonal build. We don’t blame you for not noticing. This news was likely drowned out by all the macro “noise” around trade wars, flattening of yield curves, rise in inflation, tax reform, new Fed Chair (hawkish or dovish?), spike in VIX, and volatility in FANG stocks. Admittedly, there is a lot of macro news to digest.

Posted by Luis Ahn on Apr 11, 2018 8:34:50 AM

Topics: oil, From the Desk of Luis Ahn, International Equity

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Declining Correlations Make Case for Increasing International Equity Allocations

Are the benefits of international equity diversification finally returning? From a performance and correlation perspective, it sure seems like a possibility.

Posted by Richard Pell on Mar 27, 2018 10:01:00 AM

Topics: International Equity

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The Impossibly Hard to Predict Equity Market Correction

After equity markets hit all-time highs earlier this year, market pundits have been eager to “call the top.” We have one of the largest hedge funds in the world taking on significant short positions in the European market, an equity strategist at a bulge bracket firm calling for a potential 40% market correction “at some point” and a recent article claiming that high cross-asset correlation is a sign of an impending sharp correction. These headlines have analysts all asking the same question: should we brace for a big sell-off?

Posted by Luis Ahn on Mar 15, 2018 11:38:01 AM

Topics: From the Desk of Luis Ahn, International Equity

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Is International Equity Outperformance Just Beginning?

Are you frustrated with your globally diversified equity exposure? Are you considering reducing your international equity allocation in favor of a more U.S.-centric portfolio? If so, we are here to say hold on! We totally get it, but please consider the following before hitting that sell button:

1.  Returns have begun to favor international equity over U.S. equity.

2.  Low correlations actually signal that now is time to maximize the diversification benefits of international equities.

Posted by Richard Pell on Mar 7, 2018 12:26:39 PM

Topics: International Equity

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What the Moves in the Bond Market Mean for International Equity Investors

The bond markets are seeing a sell-off. Yields on 10-year U.S. Treasuries rose as high as 2.90% in mid-February, compared to the September 2017 low of 2.04%.

Posted by Daeil Cha on Feb 28, 2018 3:18:17 PM

Topics: From the Desk of Daeil Cha, International Equity

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Smart Technology: Inherent Risks of GPS-Enabled Devices

Today, we want to talk a bit about security and technology. The “Internet of Things (IOT)” is a favored buzz word right now in technology and technology investing. This term describes the now nearly ubiquitous internet connected devices, often GPS-enabled. Smart and connected devices today are cheap and readily available, but do people really think about the security implications inherent to them? 

Posted by Harry Polishook on Feb 22, 2018 1:37:59 PM

Topics: From the Desk of Harry Polishook, International Equity

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Return of the Old Economy?

One of the most interesting observations of the recent market pullback (notwithstanding the spectacular collapse of volatility ETPs) is that some of the sectors we would have expected to outperform did poorly, and vice versa (see below). In a down market, we would have expected Materials, Industrials and Consumer Discretionary to be amongst the underperforming sectors; Utilities, Telecom and Healthcare to be outperforming. Even though some of the sector performances can be explained by specific reasoning (ex: expected rise in interest rates depressed Utilities), the pullback seems to actually broadly favor cyclicals. In hindsight, this could make sense as economies globally seem to be gaining steam, and the latest macroeconomic data suggest they are not slowing down anytime soon.

Posted by Luis Ahn on Feb 15, 2018 6:38:17 AM

Topics: International Equity

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2017 Fund Flows: Passive Trumps Active (Even in International Equity)

2017 was the year of massive inflows into passive funds, according to Morningstar’s annual fund flow report, which covers mutual funds and ETFs. The report highlights that a total $692 billion flowed into passive funds, led by U.S. equity and international equity funds. Conversely, almost $7 billion flowed out of actively managed funds, which was far less than outflows in the previous two years. That’s a pretty significant trouncing by passive in the annual fund flow race.

Posted by RSQ Team on Feb 7, 2018 4:50:56 PM

Topics: International Equity

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Portfolio Factor Allocation in International Equity Markets

Many hedge funds failed to outperform last year --including some of the most well-known investors-- as individual stock selection became exceptionally difficult in a low volatility environment. This article cites that some investors who struggled last year were those with deep sector knowledge. And yet, some successful investors in 2017 were also sector specialists, albeit experts in different industries (technology and biotech, in this case). With the obvious benefit of hindsight, this suggests that the volatility of a portfolio's returns can be reduced if an investor allocates by sector allocation. But how does this compare to allocation through other factors, like market cap size, style (value vs. growth), and region? Let's look at the numbers.

Posted by Daeil Cha on Feb 1, 2018 11:16:16 AM

Topics: From the Desk of Daeil Cha, International Equity

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Top 10 Things to be Thankful for in International Markets

Sometimes, it’s easy to get caught up in the risks and “what if’s” of international equity. With so many factors to keep an eye on, it’s just human nature to get a little pessimistic when the tides turn in a way that makes you fear for your portfolio.

At R Squared Capital Management, though, there were a lot of things that made us smile this year. As we approach the Thanksgiving holiday, here are the top things a few of our analysts are thankful for and believe influenced the markets in a positive way in 2017.

Posted by RSQ Team on Nov 20, 2017 5:12:22 PM

Topics: International Equity

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