(New York)

There is a big development happening in fund management. That is change is that fundamental and quantitative approaches are merging. Often, funds are no longer purely fundamental or quantitative, but instead merge the two, creating a whole new category which is starting to be referred to as “quantamental”. In its most simple form, quantamental often looks like a multi-factor ETF that also includes some continuous “human” intervention, such as reducing statistical quirks. However, more sophisticated approaches truly blend the two, using human skill to analyze stocks which are sending promising technical signals.

FINSUM: We are pretty fond of the principles which underpin quantamental approaches as they seem to take the best aspects of both philosophies. Time will tell if the approach is a winner in a broad sense.

(New York)

Quantitative ETFs are growing in popularity. Using rules-based approaches to stock-picking is cost effective and has proven successful in many cases, making quantitative methods a good fit for ETFs. With that in mind, here are seven of the best quantitative ETFs: QuantX Dynamic Beta US Equity ETF (XUSA, 0.59% fee), Hull Tactical US ETF (HTUS, 0.92% fee), Cambria Global Momentum ETF (GMOM, 1.03% fee), U.S. Quantitative Value ETF (QVAL, 0.49% fee), IQ Chaikin U.S. Small Cap ETF (CSML, 0.35% fee), Vesper US Large Cap Short-Term Reversal Strategy ETF (UTRN, 0.75%), and the SPDR MFS Systematic Growth Equity ETF (SYG, 0.61% fee).

FINSUM: CSML was the most interesting of the group for us, as we think there is more alpha to be had in small caps with these sorts of approaches. We also ran this story in case anyone has clients who have been asking for more quant funds.

(New York)

If history is any indication, the big surge in stocks that has started this year seems likely to continue. Markets have had a great week and the S&P 500 is up 11% on the year. Prices are only 5.3% off their all-time high. That bodes well because stocks tend to track their first two-month performance for the rest of the year. 64% of the time stocks continue to perform throughout the year just like they did in January and February. The last time the S&P 500 climbed more than 10% in January and February (1991), it rose an additional 14% for the year.

FINSUM: Stocks are in a sweet spot right now, with the Fed having backed off and trade fears easing. That seems likely to stay in place for a while, but we wonder if any stresses related to the 2020 election might start to weight on the market later this year.

(New York)

The yield curve narrowed continuously throughout most of 2018. The spread between 2- and 10-year Treasuries fell to just over 9 basis points in December and sits at 14 now. Where is it headed? The answer is likely towards an inversion. The Fed is releasing its minutes, and once it does, it seems likely the spread will continue to narrow. There are two scenarios that would likely create an inversion. The first is if the Fed minutes show that the central bank may raise rates again soon (sending short term yields higher). The other, and perhaps more likely, scenario is that the Fed expresses some anxiety about a recession (pushing long-term yields lower).

FINSUM: This is interesting because the two most likely scenarios for what the Fed might say/do in the near-term both add up to the same thing—a yield curve inversion.

(New York)

Along with warehouse growth, data center expansion is one of the hottest areas of commercial real estate. So how to play it? These REITs were hit pretty hard at the end of the year, but they are now making a strong comeback. The big driver at the macro level is demand for cloud services and the growth of AI, both of which increase the need for data center space. Four stocks to look at are Equinix, CoreSite Realty (COR), Iron Mountain (IRM), and InterXion Holding (INXN).

FINSUM: Data centers seem to have some strong growth drivers behind them, and along with warehouses, we think they are strong ideas for REITs.

(New York)

The recession has loomed over markets for months. However, in recent weeks those worries have faded a bit, especially as the Fed appeared to back off the gas pedal on rate hikes. However, a new survey from Bank of America Merrill Lynch shows that recession is the top fear among investors currently. A third of credit investors surveyed see a recession as their top fear. That is the highest level for a single worry in almost two years. Economic data is expected to continue to weaken, say investors.

FINSUM: The US seems to once again be the last one standing as the whole world starts to slow. Can we hold up yet again?

(Seattle)

Tony Mitchell is a well-known fund manager in the tech space. His tech mutual fund has outperformed the market for years. However, it has done so with a very interesting quirk—it has never held Amazon, until now that is. The reason why is that its P/E ratio always seemed to high at between 190 and 400. However, recently, Amazon’s P/E ratio has fallen back to earth. Its current ~80x is not cheap by any measure, except against its own history. The company’s web services division is growing strongly, its advertising business is surging, and it has a good foothold in the gaming industry. This means it could be a good time to pick up Amazon’s stock.

FINSUM: If you believe Amazon is going to continue its growth story, then right now does seem like an ideal time to pick up shares.

(New York)

Being journalists ourselves, we are always on the lookout for the best content for our readers, including who to read for stock calls. That led us to a site, called TipRanks, which ranks all the equity research analysts on Wall Street. One of the major components of their rankings is their average market return per recommendation. The top ten analysts from returns are: Richard Davis, Cannacord Genuity (42.7% return per recommendation); Ross MacMillan, RBC Capital; Joseph Foresi, Cantor Fitzgerald; Matthew Hedberg, RBC Capital; Glenn Greene, Oppenheimer; Brian Schwartz, Oppenheimer; John Difucci, Jefferies; Brent Bracelin, KeyBanc; Gerard Cassidy, RBC Capital; and Brian Peterson, Raymond James.

FINSUM: This list, and TipRanks in general, is a great way to separate value from noise in all those equity research comments.

(Miami)

It seems like wealthy people everywhere are talking about picking up and moving to Florida to get away from the lack of SALT deductions in so many states. However, UBS financial advisors say it isn’t as easy as it is made to sound. Firstly, there are significant residency rules—it is not as if you can just buy a place in Florida and make it your tax home without really leaving your high tax state. And secondly, even for those who do actually want to move, the issue is that the wealthy suburban home market is very soft at the moment, and these residents are having a hard time selling their primary home, which means they are stuck.

FINSUM: Moving is not nearly as simple as the idea of “retiring in Florida” sounds. We do think this will cause a migration, but it will not be a flood.

(Washington)

The pool of Democrats keeps moving left. In what comes as a no surprise (but was not a sure thing), Bernie Sanders has just announced his candidacy for the 2020 election. His platform is going to be built around three pillars: free education, Medicare for all, and a $15 minimum wage. Sanders narrowly missed the Democratic nomination in 2016 and has a particularly strong following among the young.

FINSUM: Politics could not be more polarizing right now, so in many ways it makes sense that the Democratic candidates are quite far left. The difference between now and 2016 is that those leftist narratives have more popular traction than the more centrist position Hillary Clinton adopted then.