Lazard Insights

Quality indexes have outperformed value, growth, and the broader market for decades. We believe an active approach to quality—one that focuses on companies with high levels of financial productivity to start—can increase return potential even further.

Is there any place to hide from market volatility? There may be an alternative: hedged convertible bonds have a unique source of potential return that stems from volatility itself. And we believe they may be more than a short-term solution.

Often ignored by global investors, Japanese equities now stand out as an opportunity relative to other developed markets and to their own history.

Rising energy prices are one of the most significant economic consequences of the conflict in Ukraine. Europe, which relies heavily on Russian oil and gas, has taken the greatest hit. But Europe is also one of Russia's best customers and a valuable source of revenues, meaning that the dependency cuts two ways.

The mapping of the human genome compares in its impact to that of the silicon chip. Healthcare's Apples and Amazons may eventually emerge, but unlike the hot air that inflated earlier bubbles, published research findings can guide fundamental investors.

China's increase in regulations over the past year has led to market value losses of more than US$1 trillion and raised doubts about the country's commitment to a market-based economy. Many of the regulations, however, aim to address structural issues, especially growing income inequality. As China pushes for “common prosperity,” we believe the country can achieve more sustainable growth, and investors can uncover some compelling opportunities.

The migration of sophisticated games onto mobile devices, which originated in Asia, has triggered explosive digital gaming growth worldwide.

Agriculture's dual nature as an essential resource and a primary source of greenhouse gas emissions poses a unique challenge, but we believe companies that provide exposure to solutions at the intersection of food production and environmental sustainability may be rewarded by the market in the long term.

If inflation remains above the Fed's 2% target through 2022 and then stabilizes at or slightly above 2% thereafter, it will mark a major turning point for interest rates.

SPACs, special purpose acquisition corporations, have become an attractive alternative to traditional IPOs. PIPEs—private investments in public equity—may well offer the most promising entry point.

With yields close to their historic bottom and jittery markets anticipating resurgent inflation, we believe investors should no longer count on returns on “risk-free” income keeping pace with rising prices. In our view, diversification across fixed income sectors with global exposures provides an essential foundation for withstanding and ultimately prospering in this environment.

The now ubiquitous bitcoin and other cryptocurrencies are creating a decentralized, alternative global financial system. Hoping to push back against the competition, central banks, led by the People’s Bank of China, are investigating what it would take to launch their own digital currencies.

We answer the question on many investors’ minds: Is there still a role for actively managed, broadly diversified portfolios that make investment decisions based on corporate fundamentals?

In this Insights, we discuss the enormous and fundamental implications changing demographics will have in determining the fate of entire industries as new technologies and ecosystems come into favor and replace old products and services.

The 5G wireless network promises to revolutionize the internet, but no matter which nation ultimately assumes global leadership, the competition itself should create enormous opportunities for investors.

When the banks stumble, the economy can falter, as it did in the global financial crisis a decade ago. Today, the COVID-19 pandemic poses sizable risks for the US banking system, risks which the stock market appears to have more than priced in.

Have markets overplayed the threat of sovereign emerging market defaults? We believe the widespread misperception about the risk defaults pose to emerging markets debt has created some of the most compelling alpha opportunities on offer in today’s markets.

We use a case study on water risk in the global beverage industry to show how sustainability has many profound and far-reaching implications.

The COVID-19 pandemic has introduced extraordinary uncertainty and volatility to financial markets and put volatility forecasting strategies to the test.

Behind the headlines, some of the world’s biggest commodity-driven emerging markets are “getting it.” They’re cleaning up corporate governance, advancing shareholders’ interests, and inviting private investment. Russia, which had the world’s best-performing stock market in 2019, is a beneficiary of this emerging trend and we think Brazil may be next. 

A decade of central bank easing, and the resulting low-volatility environment, has made many investors complacent about risk management.

In the US, unemployment is low, corporate earnings are growing, and businesses remain confident. But with global uncertainty running high, it may be time for investors to refocus on the fundamentals.

Ronald Temple outlines four trade deal scenarios and describes how investors might position their portfolios against a trade-tension recession.

Behind the glum market outlook a European recovery is gaining steam, creating an environment that favors alpha generation, even as fundamentals lag in traditional growth industries.

We discuss the flaws and biases of forecasters and propose a probabilistic framework to forecasting the market.

We discuss how technology is rapidly changing the emerging markets investment landscape.

One of the biggest businesses in the world is one consumers never see and may not even be aware of: the global payments system. We take a look at the giant players in this industry, the evolution of the payments systems in China and the US, and finally, the next opportunity: India.

We evaluate the cyclical factors and the structural support that could revive the housing markets.

The era of benign markets appears to be over. We explain the market’s historic bull run, sources of the market’s recent volatility, and prospects for a shift in market leadership. AUTHOR Paul Moghtader, CFA Managing Director, Portfolio Manager/Analyst Paul Moghtader is a Managing Director and Portfolio Manager/Analyst, leading Lazard's Equity Advantage team. He began working in the investment field in 1992. Prior to joining Lazard in 2007, Paul was Head of the Global Active Equity Group and a Senior Portfolio Manager at State Street Global Advisors (SSgA). At SSgA Paul was the senior manager responsible for the research and portfolio management of all multi-regional active quantitative equity strategies. Previously, Paul was an analyst at State Street Bank. He began his career at Dain Bosworth as a research assistant. Paul has a Master of Management (MM) from Northwestern University and a BA in Economics from Macalester College. Paul is a CFA® charterholder.

The yield curve has inverted prior to each of the last nine recessions. So some investors are concerned that the current yield curve flattening may be followed by an inversion, which could be a harbinger of recession. We see several reasons why this time may be different. Featured Speaker Eulogio (Joe) Ramos Managing Director, Head of US Fixed Income Lazard Asset Management LLC (New York) Joe Ramos is a Managing Director and Head of US Fixed Income. He is also Portfolio Manager/Analyst on the US Fixed Income team. He began working in the investment industry in 1978. Prior to joining Lazard in 2006, Joe was the Chief Investment Officer of Ambac Financial Group, Inc., where he was responsible for the oversight and management of Ambac's balance sheet investment strategies, including the Excess Liquidity, Core Capital, Plus, and levered IA portfolios. Previously, Joe was a member at E.H. Capital Group, LLC, a Senior Vice President and Portfolio Manager at Lazard Asset Management, a First Vice President and Senior Portfolio Manager at Lehman Management Co., and a Senior Analyst in the Lehman Brothers Kuhn Loeb Fixed Income Research Department. He has a BS from New York University. Joe Ramos is a member of the CFA Institute, the NYSSA and the Economic Club of New York.

Escalating trade conflict could upset the current multilateral global trading system. Reorienting global operations and supply chains could be difficult, disruptive, and costly for many businesses. We believe understanding how a business and its competitors are exposed to this risk is critical to evaluating the potential impact of protectionism on profits. Featured Speaker Ron Temple Managing Director, Co-Head of Multi-Asset and Head of US Equity Lazard Asset Management LLC (New York) Ronald Temple is a Managing Director and Co-Head of Multi-Asset and Head of US Equity, responsible for oversight of the firm's multi-asset and US equity strategies as well as several global equity strategies. He is also a Portfolio Manager/Analyst on various US and global equity teams. He joined Lazard in 2001 with ten years of global experience including fixed-income derivative trading, risk management, corporate finance and corporate strategy in roles at Deutsche Bank AG, Bank of America NT & SA and Fleet Financial Group in London, New York, Singapore, San Francisco, and Boston. Ron has an MPP from Harvard University and graduated magna cum laude with a BA in Economics & Public Policy from Duke University. He is a member of the Council on Foreign Relations, the Economic Club of New York, Duke University’s Graduate School Board of Visitors and the New York Society of Security Analysts (NYSSA). He also served as a trustee of the Link Community School in Newark, New Jersey, from 2006-2014, as a member of the Trinity Board of Visitors at Duke University from 2006-2012 and a member of the Financial Accounting Standards Advisory Council from 2013 to 2015.

Among the most vulnerable and inviting targets in any trade war are commodities—the energy, metal, and foodstuffs on which the world depends. Tariffs on these necessities discourage consumption, inhibit growth, and may well add to the challenges facing the global economy at a time when it must grow faster to escape the burden of debt. We assess the likely duration of the looming trade war, its potential consequences for global economies, and its implications for commodity investors. Featured Speaker Terence P. Brennan Director, Portfolio Manager/Analyst Lazard Asset Management LLC (New York) Terence P. Brennan is a Portfolio Manager/Analyst on the Commodities team. He began working in the investment field in 1990. Prior to joining Lazard in 2016, Terry was Lead Portfolio Manager of the Deutsche Asset Management Global Commodity Strategy. Previously he was an Emerging Markets Analyst for Zurich Scudder and Merrill Lynch Asset Management. Terry has a BA in German from Fordham University.

We assess the global implications of a strong US dollar. Featured Speakers Ardra BelitzManaging Director, Portfolio Manager/AnalystLazard Asset Management LLC (New York) Ardra Belitz is a Managing Director of Lazard Asset Management LLC and a Portfolio Manager/Analyst specializing in emerging markets currency and debt. She has been a member of the Emerging Income management team since 1998. Ardra began working in the investment industry in 1994. Prior to joining Lazard in 1996, she worked at Bankers Trust Company. Ardra has her BA in Economics from Brandeis University, from which she graduated Phi Beta Kappa. Jared Daniels, CFAManaging Director, Portfolio Manager/AnalystLazard Asset Management LLC (New York) Jared Daniels is a Portfolio Manager/Analyst on the Global Fixed Income team. He began working in the investment industry in 1997. Prior to joining Lazard in 1998, Jared was with CIBC Oppenheimer Corporation. He has a BS in Public Financial Management with a minor in Economics from Indiana University. Jared is a member of the New York Society of Security Analysts (NYSSA).

As the market environment normalizes, the “easy” returns are likely over, as evidenced by rising volatility. We believe that equity investors who wish to successfully navigate this period of change will need to be more selective about their holdings, as simply tracking the market could deliver a much different experience than that of the past 12–18 months, when equity volatility was at historical lows. Featured Speaker Edward KeatingDirector, Client Portfolio ManagerLazard Asset Management LLC (New York) Edward Keating is a Client Portfolio Manager on the Discounted Assets, Global Listed Infrastructure, and Global Equity Franchise teams. He began working in the investment field in 2001, upon joining Lazard. He has a BA from Iona College.

Demand and supply is rising fast for green bonds as investors increasingly seek to invest responsibly, balancing financial objectives with concern for the environmental and social impact of their investments. In this Insights, we provide more background on these "green" securities including their investment characteristics and the types of projects they fund. Featured Speaker Yvette Klevan Managing Director, Portfolio Manager/AnalystLazard Asset Management LLC (New York)   Yvette Klevan is a Portfolio Manager/Analyst on the Global Fixed Income team. She began working in the investment field in 1982. Prior to joining Lazard in 2002, Yvette was a Senior Portfolio Manager with Offitbank. Previously she worked at Bank of America, Chase Manhattan Bank and Aramco Services Company. Yvette has an MBA in Finance and Management Information Systems from the University of Houston and a BBA in Mechanical Engineering Route to Business from the University of Texas. As of February 2018, she serves as a signatory representative to the Fixed Income Advisory Committee for the Principles for Responsible Investment (PRI).

The recent success of smart beta strategies has masked their underlying risks, which could result in sizable and prolonged drawdowns. We highlight some of these flaws and discuss how a multi-factor approach could mitigate these risks. Featured Speaker Paul Moghtader, CFA Portfolio Manager/AnalystLazard Asset Management LLC (Boston) Paul Moghtader is a Managing Director and Portfolio Manager/Analyst, leading Lazard's Equity Advantage team. He began working in the investment field in 1992. Prior to joining Lazard in 2007, Paul was Head of the Global Active Equity Group and a Senior Portfolio Manager at State Street Global Advisors (SSgA). At SSgA Paul was the senior manager responsible for the research and portfolio management of all multi-regional active quantitative equity strategies. Previously, Paul was an analyst at State Street Bank. He began his career at Dain Bosworth as a research assistant. Paul has a Master of Management (MM) from Northwestern University and a BA in Economics from Macalester College.  

The complexion of the MSCI Emerging Markets Index is about to change. MSCI’s announcement that they will include China A-shares means that China, already a large part of the index, will become even more important. How will this impact investors? Featured Speaker John Burge Director, Product Manager Lazard Asset Management LLC (New York)   John Burge is a Product Manager on the Emerging Markets team. He began working in the investment field in 1988. Prior to joining Lazard in 2015, John was Senior Vice President and Portfolio Manager with GE Asset Management. He has an MBA in Finance from University of North Carolina at Chapel Hill and a BA in Economics and Spanish from Hampden-Sydney College.