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Business Times
3 days ago
- Business
- Business Times
How the US market fell from 4th to 41st for returns – and what it means for stocks in 2025
NEARLY two months after US President Donald Trump roiled markets with his on-again, off-again 'reciprocal' tariffs and universal 10 per cent levy, uncertainty remains. My last column showed the illogic underpinning this – and counselled patience. Here is an update – and how to profit. Trump says America 'wins' through his tariffs, reclaiming 'lost' manufacturing jobs and cutting the trade deficit. No. Tariffs always hammer most the one who imposes them. Don't take my word for it. Look to the markets. For any good capitalist, this is step one. Markets are a lie detector, weighing talk, forecasts and opinions – and rendering verdicts. Non-US stocks were up 8.8 per cent this year to May 22. The Straits Times Index gained 4.9 per cent, a hair's breadth from all-time highs. China? Up 10 per cent. European stocks rose 13.7 per cent. Mexico, up 20.7 per cent. US stocks? Down 5.5 per cent – a striking lag. If we look at it another way: Of the 47 MSCI All-Country World Index (ACWI) nations, America was 41st in the ranking of countries by their year-to-date returns as at May 22. In the same period last year, America was fourth – with its 28.8 per cent return fully seven percentage points ahead of the ACWI. Why did US stocks go from No 4 to 41? The answer is No 47; the 47th president, that is. Trump's vacillations make funds flee America. Markets know that attempts to reduce the trade deficit are senseless. A trade deficit means a capital account surplus by definition – that capital is foreign investment in the US. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Why would reversing that be desirable? Why would the government intervening to favour American firms, instead of letting free markets sort out the most efficient use of capital, be considered positive? Why would policy that seemingly changes on a whim be considered good? Stocks are seeing through the smoke and mirrors. America's lag tells you those things are bad, not good. My last column noted how Trump justified his 90-day reciprocal tariff pause on Apr 9 on the grounds that some 75 nations sought deals. Many claimed that this revealed Trump's true aim. The president's fans could say that tariffs, confusion and uncertainty are solely a leverage to strike a flurry of deals – delivering even freer trade. However, the markets are looking at reality, not armchair psychobabble. Deals to make more deals Since Apr 9, just two tariff 'deals' have emerged – one with Britain and one with China. Both are fluff. Britain's is a one-year, non-binding agreement to mitigate tariffs until a full trade deal happens. A deal to make a deal. It affects only a handful of industries. Crucially, the 10 per cent universal levy remains on most UK goods, just like for those from Singapore. America's China deal looks bigger, but only because the bar was incredibly low. Yes, it cut 145 per cent tariffs on Chinese goods to 30 per cent, while China dropped retaliatory levies from 125 per cent to 10 per cent. However, the 'deal' lasts only 90 days and effectively just buys time. Another deal to make a deal. Plus, tariffs on China remain 30 percentage points higher than in January. Both countries are worse off, but especially America. Who wins from this? Maybe Singapore, via re-exporting. On May 16, Trump flip-flopped again. Boasting that 150 nations now seek 'deals', he said that there isn't time to negotiate them all. His 'solution'? Telling nations what rates they will pay – and offering chances to appeal. Didn't he already do that on 'Liberation Day' on Apr 2? How will it work? Will rates be higher, lower or the same as those on Apr 2? He did not say, further fanning uncertainty. Then, days later, he threatened the European Union with new 50 per cent tariffs – and 25 per cent on Apple products. More uncertainty. Meanwhile, legal challenges to Trump's tariffs progress. Maybe real deals will come that will actually lower trade barriers and uncertainty – a huge potential upside. Then again, maybe not. But as my last column said, even if all tariffs return, the pain will be less than feared – which will be bullish for markets. Importers can readily skirt America's understaffed, overwhelmed tariff-collecting Customs and Border Protection staff via both illegal and legal means. The latter include 'tariff splitting' – stripping out services-related costs such as marketing to reduce goods' values – or storing imports in bonded warehouses. Or, shipping in goods that are valued to be under US$800. And myriad illegal ways such as misclassifying and undervaluing goods. Or, as mentioned, exporters can 'tranship' or re-export via lower-tariff nations – such as Singapore. This is why China's April exports didn't tank despite shipments to America tumbling 21 per cent. South-east Asia gobbled up the difference – and shipped them on. It drove Singapore's huge, 113 per cent year-on-year spike in April re-exports to America. Vietnam and Taiwan are seeing similar surges. Shippers could further tap Canada or Mexico, gaming the US-Mexico-Canada Agreement's tariff exemption. Hence, while April's total tariff collections rose, they missed administration forecasts by 75 per cent. That will persist. Happily, fear exceeds the negative effects, especially outside America. For investors, that is a recipe for a bull market – with non-US stocks continuing to lead. The writer is the founder, executive chairman and co-chief investment officer of Fisher Investments, an independent investment adviser serving both individual and institutional investors globally
Yahoo
21-05-2025
- Business
- Yahoo
Market ETFs: Major inflows are going into international equities
As the "Sell America" trade reemerges among US investors, the iShares All Country World Index ETF (ACWI) is outperforming the S&P 500 (^GSPC) year-to-date. Rareview Capital founder, CIO, and strategy shares portfolio manager Neil Azous sits down with the Catalysts team to talk more about international stocks outperforming US markets (^DJI, ^IXIC, ^GSPC) in 2025. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. US equities underperforming the rest of the world year to date with the iShares ACWI ETF notching gains over 5% compared to the half percent gain for the S&P year to date. So do the numbers back up the so-called sell America trade and what should investors do about it? Joining us to discuss, we've got Neil Zeus. He is Rareview Capital's founder and CIO, as well as portfolio manager of the Strategy Shares Monopoly ETF for this week's ETF report brought to you by Invesco QQQ. Thank you so much for joining us, Neil. So look, we know that investors are keen on the sell America trade, but I'm curious if you can talk about what you're seeing in terms of the flows here. Where are you seeing the most demand when it comes to equities outside of the United States? Sure. Hi Madison, good morning. Thank you for having me. Great to be here with you. Uh, so you're right. Uh, the all-country world index or the barometer for global equity beta or the S&P 500 for, uh, the global stock market is outperforming by about four and a half to 5% year to date. It's a pretty meaningful number if you were to think about that on an annualized basis, we would get over 15%. And then when you drill down, there are a couple of places that are outperforming. Uh, primarily Europe, which takes the bulk of it. So the Euro stocks index, if you're looking at it in, uh, dollar terms, uh, it would be up around 11% or in euro exchange rate terms, 21%. So it's having a very significant out performance. And if you were to drill down further, uh, Eastern Europe or the Eastern European block, especially Poland, uh, which can take the bulk of the flows over there is really having, uh, a substantial out performance. I think up 40 to 50% of the year on a variety of factors, primarily a release in the tensions around Russia and Ukraine. And so yes, the answer is, is inflows are going into international equities and the predominant beneficiary of that is European equities and then at a more micro level, Eastern Europe. Yeah. Uh, and the, the question becomes, is it's a philosophy question, right? Do you believe in global diversification? Even after many years of that not working. And that's really the big issue in the industry at the moment. How much do you put there? Is it a fake, a head fake like every year or is this time real? And this is something my guest host, Brian Levitt and I were just talking about. Brian, you got a question for Neil? Yeah, how do the inflows compare to the amount of money that we had seen going into the United States over the last number of years? Is it, does it look to you like if this trade continues, we're early on in this rebalancing from investors, or has there been a, a significant move already? I think that's a pretty fair question. Uh, Brian, nice to see you. Thank you. Uh, so if this was a baseball game and you had to, you know, translate what you just asked into innings, this would be like the first or the second inning. Uh, the reality is, is that the market caps in the United States are trillions of dollars overall larger than European equities. And so it doesn't take a, a lot of inflows to move those markets around. And so if this is a real event, and I would define real as not just fiscal expansion coming out of the European Commission or Germany specifically, but an earnings event where companies begin to earn a lot more money, we haven't seen anything yet. And, and, and this is by the way, after a decade of this underperformance. So, yes, you may have missed the initial low-hanging fruit, but if you believe in a secular change underway, there is significant runway. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Market ETFs: Major inflows are going into international equities
As the "Sell America" trade reemerges among US investors, the iShares All Country World Index ETF (ACWI) is outperforming the S&P 500 (^GSPC) year-to-date. Rareview Capital founder, CIO, and strategy shares portfolio manager Neil Azous sits down with the Catalysts team to talk more about international stocks outperforming US markets (^DJI, ^IXIC, ^GSPC) in 2025. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. Sign in to access your portfolio
Forbes
28-04-2025
- Business
- Forbes
How Retirement Investment Strategy Impacts Retirement Spending
When it comes to retirement planning, most people know they need to save, but few understand how certain retirement investment strategies can impact the amount of income they'll actually have. In this article, we'll explore four different retirement investment strategies and how each affects your ability to replace 70% of your pre-retirement income: The MSCI ACWI (All Country World Index ) captures large and mid-cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,558 constituents, the index covers approximately 85% of the global investable equity opportunity set. For a complete description of the index methodology, please see Index methodology. For investment purposes, I use the iShares MSCI ACWI ETF which seeks to track the investment results. The S&P U.S. Aggregate Bond Index is designed to measure the performance of publicly issued U.S. dollar denominated investment-grade debt. The index is part of the S&P Aggregate™ Bond Index family and includes U.S. treasuries, quasi-governments, corporates, taxable municipal bonds, foreign agency, supranational, federal agency, and non-U.S. debentures, covered bonds, and residential mortgage pass-throughs. It has 15,071 constituents. For investment purposes, I use the iShares Core U.S. Aggregate Bond ETF which seeks to track it. Here's the sample case we'll follow: We'll also assume the client will qualify for Social Security benefits, which adjust with inflation. With salary increasing 2.5% per year: Annual retirement contributions: Total future contributions: about $537,000 in future dollars. Using the Social Security Benefits Estimator, this worker could expect about $40,000–$45,000/year starting at full retirement age. Target annual retirement income: 70% of $184,475 = $129,133 (before taxes). Income Sources: Based on these assumed, but not guaranteed, average returns: Here's what each retirement investment mix could grow to by retirement: Retirement investment portfolio mixes Envision Wealth Planning Inc. Note: In the new transition strategy,100% ACWI Pre/60/40 Post, the account grows 100% ACWI until retirement, then rebalances into 60/40 for safer withdrawals. Using a 4% withdrawal* (source: Investopedia): Portfolio strategy and resulting income Envision Wealth Planning Inc. *Note: I am not advocating for 4% withdrawal. It is used here to illustrate the results with that assumption. I advocate working with a designated professional familiar with withdrawal strategies to personalize. Shortfall vs. Goal ($129,133): The 100% ACWI pre-retirement / 60/40 post-retirement approach offers: This helps balance growth and safety, reducing the risk of running out of money later in life. In my Forbes article on maximizing Roth strategies, I discuss similar risk management ideas for building tax-smart, diversified retirement income streams. Even the most aggressive strategy leaves a shortfall. Here's how to fix it: 1. Save More Each Year Boost contributions percentage each year. 2. Delay Retirement Waiting until 70 raises Social Security by about 8% annually. 3. Add Roth Accounts Tax-free income from Roth IRAs and Roth 401(k)s can ease the burden. My article on Roth conversions explains how smart tax moves today can lower taxes later. 4. Adjust Lifestyle Expectations Planning for a 5-10% lower spending target could make a huge difference in retirement security. Retirement investment strategy is a key component of creating future retirement income. Planning for retirement isn't just about picking a number. It's about building a living, breathing strategy that adapts to life's changes. Working with a designated and fiduciary financial planner, such as a Certified Financial Planner, can help you build a personalized plan that keeps growing while protecting what you've worked so hard to build. By using smart retirement investment choices, increasing savings, and planning taxes wisely, you can make sure your retirement isn't just comfortable — it's secure.
Yahoo
30-01-2025
- Business
- Yahoo
Steven Romick's FPA Crescent Fund 4th Quarter Letter: A Review
Dear Shareholder: Performance Overview The FPA Crescent Fund Institutional Class (Fund or Crescent) gained 1.05% in Q4 2024 and 13.96% in the trailing twelve months. Its twelve-month return was 79.8% of the global market (i.e., MSCI AWCI, the ACWI), outperforming its 69.2% average net risk exposure. Performance versus Illustrative Indices (%) (1) Fund Q4 2024 TTM FPA Crescent - FPACX 1.05 13.96 FPA Crescent - Long Equity 1.15 19.85 MSCI ACWI -0.99 17.49 S&P 500 2.41 25.02 60% MSCI ACWI / 40% Bloomberg US Agg -1.81 10.77 60% S&P 500 / 40% Bloomberg US Agg 0.21 15.04 Warning! GuruFocus has detected 2 Warning Sign with XAMS:HEIA. Portfolio & Market Discussion The ACWI increased 38.98% in the two years ending 2024, five times its 7.7% cumulative earnings growth. The global market is more richly valued than the target-rich environment at the end of 2022, with a price-to-earnings (P/E) ratio that is approximately 29% higher. Crescent's net risk exposure has migrated lower as valuations increased. As expected, and is typical, the Fund's exposure to the equity market declined 8.5 percentage points from year-end 2022 to 2024 as stock prices increased. When exposure was higher at year-end 2022, we wrote, We think lower valuations and higher bond yields help position us to take advantage of any continued market weakness. We further explained at year-end 2023 that Today's less attractive valuations (relative to last year), particularly in the U.S., help explain the Fund's slightly lower risk exposure. (3) Therefore, it should be no great surprise that 2024's exposure is still lower. Over nearly three decades, we have leaned into market weakness and backed away from strength. We pursue an equity-like return when purchasing high-yield bonds. We prefer to assume credit risk, where we offer some analytical value, rather than interest rate risk, where direction or magnitude are less predictable. The Fund's credit exposure remains at 2.4% due to mediocre yields and low spreads. Good stock market performance tends to breed investor complacency. Today, the largest proportion of investors since the Great Financial Crisis believe that there is less than a 10% probability of a stock market crash. Believing that little can go wrong creates the danger that one can lose more than they believe possible. Greater exposure at higher valuations is rationalized. Three occasions occurred in the last thirty years when enterprise value-to-sales (EV/Sales) reached such a distended level. When complacency takes center stage, caution often finds itself relegated to the wings, allowing valuations to reach inappropriate levels. Only a small percentage of stocks (~30%) in the S&P 500 outperformed the index in 2023 and 2024. The last time we witnessed such concentration was in the internet bubble at the turn of the century. Momentum stocks have led the market, particularly in 2024. According to Morgan Stanley, momentum ruled more than any other factor. Sure, high growth and high-quality stocks have outperformed low growth and junkier stocks, but high momentum stocks have exploded higher (relative to low momentum stocks). The current momentum run is one of the top momentum runs since 1995, with high momentum stocks outperforming low momentum by +28% year-on-year as of Dec 11th, a two standard-deviation event. (8) Momentum's gravitational pull can bring lesser planets into its orbit, as is the case with cryptocurrency which had a big year. We find it hard to believe that you can earn money by telling fart jokes, yet there's a billion-dollar market for the crypto FART COIN. This likely suggests that caution is warranted, though we don't know what or when things might implode. Many less flatulent companies trade at indefensible prices. Beyond the Magnificent Seven stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla), numerous other more mundane but good businesses have tapped into investor zeitgeist and in our opinion have achieved cult-like status. The admittedly curated list of companies below that, among other things, sell paint, uniforms, mops, air conditioning and heating equipment, and store old paper documents have seen their stocks soar and now trade at approximately 40x 1-year forward earnings. Their average P/E is nearly 3x the estimate of their next 3-year projected earnings growth. We find it difficult to accept that they trade at such high multiples, especially when we believe Crescent's equity positions offer better value, trading at a lower P/E with higher projected earnings growth. A more expensive US market does not mean all stocks are expensive. We continue to find potentially better value overseas and in small and medium-sized US companies. Using third party consensus estimates, Crescent's diversified equity portfolio, of what we believe to be market-leading businesses, trades at 15.8x projected earnings and 2.1x book value, with 22% expected earnings growth over the next three years. We hold many stocks in the portfolio that the world has not fallen in love with, allowing for a portfolio that trades at a lower valuation and with projected above-market growth, which should serve our investors well. We occasionally show global valuations to help explain changes in regional portfolio weightings. However, that does not take into account the quality of business or industry sector, and the US market ranks higher on both counts. Nevertheless, you can see the valuation gap is about as wide as it has been since 2000 Crescent's top five performers contributed 6.88% to its trailing twelve-month return while its bottom five detracted 2.00%. We will review four companies that have impacted portfolio performance but that we have not recently discussed. (15) Heineken (XAMS:HEIA) is a global beer business with 150 years of heritage and has market-leading positions in its various markets. Over the past year, the company's shares have derated and now trade at 11x earnings. With 55% of revenue coming from faster-growing developing countries, we think Heineken has a good chance to maintain the mid-single-digit growth (revenue and EBITDA) that the company produced in the last decade. We like that that company has a strong balance sheet, meaningful dividend and opportunity to begin share buybacks. Glencore (LSE:GLEN) is a global mining and marketing company with essential positions in commodities of the past (thermal coal) and future (copper, cobalt, nickel, and met coal). Shares have derated on the back of Chinese economic weakness and softer commodity prices. We think that Glencore's management is the best in the business. The company operates with a strong balance sheet and returns excess capital to shareholders through a variable dividend and share repurchases. The shares currently trade at 9x FCF (average of the past 5 years and estimate for 2025). Comcast (NASDAQ:CMCSA) is a leading broadband and media business. Competition in the broadband business and the media industry's evolution has pressured the company. The media side of the company tends to make headlines, but the broadband business is responsible for most of the economics. Competition from fixed wireless and overbuilders has resulted in shrinking subscribers. We think the business will emerge no worse than an average telecommunications company, which currently trades as such - our downside case. Pricing and the company's growing wireless offering, however, have allowed the company to continue to grow, which we believe leaves attractive upside for the stock. LG Corp (XKRX:003550) is a Korean conglomerate with exposure to various businesses, ranging from chemicals and cosmetics to the local Coca-Cola bottler, to name those that start with C. Despite the multiple operating businesses that introduce some complexity to the investment thesis, the actual structure of the holding company is relatively clean, and the parent company's balance sheet is robust. We continue to find the valuation to be highly asymmetric, with a look through earnings multiple on after-tax earnings that we calculate to be in the single digits on a look-forward basis, complemented by recent share repurchases and a trailing dividend yield of more than 4%. Closing Rudyard Kipling's poem Brother Square Toes encourages the reader to maintain their values despite adversity. Looking past its antiquated male-centric view, its message emphasizes the virtues of humility, integrity, and self-belief that embody a good leader (and hopefully portfolio manager). It begins, If you can keep your head when all about you are losing theirs which is what we have done in the past and hope to continue to do with the expectation that it should help your portfolio's performance. Thoughtful stock selection by your portfolio managers, ever mindful of what can go wrong, will hopefully translate into a better and smoother journey than holding the cult stocks that seem to worry very few. Writing this shareholder letter seems frivolous in the context of the apocalyptic terror that we have witnessed in our backyard. While a few of us had to evacuate our homes due to the Los Angeles fires, we are fortunate that no one at FPA lost their home, and, more importantly, we are all safe. We cannot say the same about the dozens and dozens of friends in our community who lost their homes and everything in it all the memories, collectibles, cars, photographs, and kid's toys- to begin the list. Whole communities have ceased to exist. We appreciate the many calls and emails of concern from our shareholders, partners, and providers. Fortunately, we and our FPA colleagues dodged the worst of this horror and now look to help those affected move forward. Thank you, as always, for your continued confidence in our Contrarian Strategy. Respectfully submitted, FPA Crescent Portfolio Managers January 28, 2024 (1) Source: FPA, Morningstar. Comparison to the indices is for illustrative purposes only. The Fund does not include outperformance of any index or benchmark in its investment objectives. An investor cannot invest directly in an index. The long equity segment of the Fund is presented gross of investment management fees, transactions costs, and Fund operating expenses, which if included, would reduce the returns presented. Long equity holdings only includes equity securities excluding paired trades, short-sales, and preferred securities. The long equity performance information shown herein is for illustrative purposes only and may not reflect the impact of material economic or market factors. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those shown. Long equity performance does not represent the return an investor in the Fund can or should expect to receive. Fund shareholders may only invest or redeem their shares at net asset value. Past performance is no guarantee, nor is it indicative, of future results. (2) Source: FPA, Bloomberg. As of December 31, 2024. (3) (4) Source: Federal Reserve Economic Data (FRED). As of December 31, 2024. Past performance is no guarantee, nor is it indicative, of future results. (5) Source: Apollo Academy. As of November 30, 2024. (6) Source: Compustat. Goldman Sachs. As of November 30, 2024. (7) Source: BofA Global Research. BofA Global Investment Strategy. As of December 10, 2024. (8) Global Multi Asset Thought of the Week. Momentum Ruled in 2024, But Reversal Likely in Stanley. December 23, 2024. (9) Source: Global Multi Asset Thought of the Week. Momentum Ruled in 2024, But Reversal Likely in Stanley. December 23, 2024. (10) Source: Factset consensus as of January 22, 2025. FPA Crescent equity position data as of December 31, 2024. (11) 3-Year Forward Estimated EPS Growth is based on FPA calculations using consensus data from Factset. Forward Price/Earnings and 3-Year Forward Estimated EPS Growth are estimates and subject to change. Comparison to the S&P 500 and MSCI ACWI Indices is being used as a representation of the "market and is for illustrative purposes only. The Fund does not include outperformance of any index or benchmark in its investment objectives. References to FPA Crescent Fund's (Fund) long equity holdings valuations refers to the valuations of the Fund's long equity holdings only. The long equity holdings average weight in the Fund was 60.4% and 61.5% for Q4 2024 and TTM through December 31, 2024, respectively. The long equity statistics shown herein are for illustrative purposes only and may not reflect the impact of material economic or market factors. No representation is being made that any account, product or strategy will or is likely to achieve results similar to those shown. Long equity statistics noted herein do not represent the results that the Fund or an investor can or should expect to receive. Fund shareholders can only purchase and redeem shares at net asset value. Portfolio composition will change due to ongoing management of the Fund. (12) Source: LSEG Datastream, Yardeni Research, MSCI, and IBES. As of December 19, 2024. (13) Source: AB Funds. Mapping Out the 2025 Investment Landscape Across Asset Classes December 5, 2024. Data as of November 30, 2024. (14) Reflects the top five contributors and detractors to the Fund's performance based on contribution to return for the trailing twelve months (TTM). Contribution is presented gross of investment management fees, transactions costs, and Fund operating expenses, which if included, would reduce the returns presented. Percent of portfolio reflects the average position size over the period. The information provided does not reflect all positions purchased, sold or recommended by FPA during the quarter. A copy of the methodology used and a list of every holding's contribution to the overall Fund's performance during the TTM is available by contacting FPA Client Service at crm@ It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities listed. (15) The company data and statistics referenced in this section, including competitor data, are sourced from company press releases, investor presentations, financial disclosures, SEC filings, or company websites, unless otherwise noted. You can find the Fund's other positions addressed previously in our archived commentaries. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Current month-end performance data, which may be lower or higher than the performance data quoted, may be obtained at or by calling toll-free, 1-800-982-4372. The FPA Crescent Fund Institutional Class (Fund or FPACX) total expense ratio as of its most recent prospectus is 1.08%, and net expense ratio is 1.05% (both including dividend and interest expense on short sales). You should consider the Fund's investment objectives, risks, and charges and expenses carefully before you invest. The Prospectus details the Fund's objective and policies and other matters of interest to the prospective investor. Please read the Prospectus carefully before investing. The Prospectus may be obtained by visiting the website at by calling toll-free, 1-800-982-4372, or by contacting the Fund in writing. This article first appeared on GuruFocus.
