Cover story: Direct lending has become the hottest frontier in alternative asset management, in which funds lend to companies either too small or too risky to be bank clients; “The direct loans carry floating rates, so enthusiasm grows with each anticipated uptick in interest rates.”
Features: 1) Barron’s list of the top 50 annuities, split into groups: immediate action annuities, deferred income annuities, buffer annuities, fixed-indexed annuity income guarantees, and variable annuity income guarantees; 2) Positive on APTV, VNE: Makers of electronic components give investors a way to buy targeted exposure to the autonomous, all-electric future of driving, but for now returns could be higher for companies focused on gas-powered vehicles; 3) Positive on AB, BLK, BEN, IVZ, TROW: Shares of many traditional asset-management firms have lost favor on Wall Street because of the growth of passive-investment vehicles, but they now look like bargains for value investors; 4) The mutual fund industry has hundreds of funds that have been around for at least five years but have less than $50M in assets, raising the question of why firms don’t terminate them.
Tech Trader: Cautious on AMZN, NFLX, TSLA: Since the recession, the companies have leveraged ultralow borrowing rates to build their businesses, raising the question of whether these “kings of debt” can continue to outperform peers as the Fed raises rates.
Trader: Donald Trump is one of three political novices to lead the U.S. since the beginning of the 20th century, and that means mistakes will be made because of his inexperience, says Tom Lee of Fundstrat Global Advisors; The S&P 500’s telecom sector has long benefited investors seeking income, but will be less attractive on that front when it is reorganized in September, becoming larger, growth-oriented, and volatile; Trade worries have dented industrial stocks, attracting bargain hunters, but with further escalation of trade wars a possibility, the sector might not be bargain.
Profile: Gary Greenberg, manager of the Calvert Emerging Markets Equity fund, believes it’s possible to invest responsibly and successfully using an ESG approach (top 10 holdings: Tencent, TSM, Samsung Electronics, BABA, Techtronic, China Construction Bank, AIA Group, Independent and Community Bank of China, KB Financial, Samsonite International).
Interview: Charles de Vaulx, manager of IVA Worldwide, owns common stocks, corporate bonds, gold, and a lot of cash, and sees opportunities to buy amid macroeconomic change (picks: XEC, Royal Boskalis Westminster, AIB Group).
European Trader: Cautious on Air France-KLM: Shares have risen in a tough year, but bears say the carrier’s recent problems—including costs, management, and more—will continue to persist, and that it needs a new business plan.
Commodities: “Oil prices have lost more than 7% this month, but some experts say that a roughly 40% spike from last week’s levels to more than $100 is possible this year.”
Streetwise: In Russia, “Economic reality will catch up with political showmanship eventually,” says Craig Mellow, at which point Russia “may get dangerous for investors.”