Insights

Regrettably, only a fraction of published medical research is reproducible by other investigators. This is no surprise to those of us who contribute or follow medical advancements. Hundreds of reviews have documented tens of thousands of examples. From cancer biology to clinical treatment tools to any study involving survey techniques and more, only a fraction of research will stand the test of time by proving true in others’ hands. Investors face a similar challenge. This article from Bloomberg, “The Finance Research Crisis is All Too Real,”  highlights the same pattern in financial research. Though causality varies, the net result is...

How might an investor protect themselves from the recent inflationary spike? How might they rationally act as the news is worsening? From a macroeconomic investor perspective, I offer caution in reacting to the news. The crescendo of news transmits multiple signals. Carrying both information and urgency, the news feeds behavioral tendencies. Investors can easily be lured into actions driven by the urgency, ultimately losing the return advantage embedded in the information. Short-term inflation is no doubt a problem. The massive shift in consumer preferences from services to goods simultaneous with global liquidity injections has snarled the supply side. Disruptions and...

We’ve all seen it in the headlines this year or experienced it firsthand. No. Not the pandemic. The other major pressing problem affecting the entire planet – climate change. Raging forest fires, droughts around the entire west of the US, major floods in Europe, power outages in Texas due to unusually severe cold weather. The list goes on and on. This November, world leaders, business leaders, diplomats, scientists and a bevy of negotiators will be gathering in Glasgow for COP26, the annual United Nations conference to develop a framework to combat climate change. The main goal of the two-week affair...

In my role as an ESG Data Analyst and Trader at an investment management firm, I spend a good part of each day grappling with how to successfully integrate ESG factors into our ESG program, a multi-asset ESG long/short strategy combining ESG US mid-large cap equities and ESG global derivatives. One of the challenges for the investment industry as a whole in developing sustainable investment approaches has been finding ways to meet the demand for more sophisticated ESG products that address some of society’s biggest environmental, social and governance challenges as well as meet the risk / return objectives of...

Human versus machine. Which is superior? It’s a centuries-old question that continues to fascinate us. Regrettably, for investors, it often fascinates to the point of distraction. But, investors are only human. And when investors are both the questioner and a stakeholder in the answer, they cannot seem to turn away. Whether in higher-order games like chess, low complexity industrial automation, or admixture processes such as legal discovery, investors diligently follow the inroads of sophisticated software advances. The potential impacts upon them are too significant to ignore. For investors, however, there is a logical progression of their diligence and curiosity. Self-reflection...

by Guillaume Detrait, President & Chief Risk Officer [email protected] During my 13-year tenure at Welton, I’ve overseen periods of growth, change, and the 2020 Covid pandemic crisis. And while each of these periods brought its own unique challenges, one organizational framework has recently helped us weather them all. That framework is known as Objectives and Key Results, or OKRs for short. I want to share our continuing experience to benefit those less familiar and to stimulate discussion with experienced OKR managers to advance learning for us all. Management By Objective (MBO) – Where we began Beginning in 2010, we formalized...

As the appetite for sustainable investing grows, investors are increasingly seeking investment options that go beyond the commonly available long-only equity ESG funds. Welton has written elsewhere, (“Solving the ESG Dilemma: How to Advance One’s Values While Also Improving Performance”), about how building in multi-asset class strategies into an ESG framework can improve performance. But if we truly want to allocate our investment dollars in ways that solve some of our greatest environmental and social challenges and that gain wider adoption by the investment marketplace, we need to develop multi-asset ESG products that can help us build more sophisticated ESG...

For macroeconomic investors the passage of this bill is a watershed event, but its implications for what comes next are likely even more consequential. The new $1.9T economic relief package that was passed by Congress this week and signed into law yesterday, is without question the most ambitious anti-poverty agenda in a generation. Economists estimate that low- and moderate-income Americans will benefit the most from this aid, especially individuals earning $75,000 or less and couples earning $150,000 or less. The number of Americans living in poverty is predicted to drop in 2021 by as much as a third because of...

How quickly the world can change! 2020 serves as a reminder of the dramatic market swings that are possible over short calendar year periods. The year began with the markets collapsing as the scale of the global COVID-19 pandemic took shape. This was followed by massive global economic stimulus and eventual vaccine optimism, producing a sizeable market rally by year’s end. We examine the underlying macroeconomics at play during the year and the likely implications for the markets going forward. Among them, we note that potential volatility due to continued global capital flows may have implications for investors. We close...

Can you be a responsible investor and still live up to your duties as a fiduciary? Recent regulatory developments from the U.S. Department of Labor (DOL) would lead one to believe investors have to make a choice and if that choice involves non-pecuniary vehicles then such investments would be prohibited. The recent guidance gives financial risk and returns primacy over any other factors, such as ESG investing, and went so far as to recommend barring ESG considerations from investment decisions by pension funds. I believe the DOL has this wrong. Responsible investing strategies don’t need to come at a cost....
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