In our new quarterly update report, Portfolio Manager Steven Vannelli, CFA, discusses the investment team’s recent analysis on two topics, including:
1. New portfolio opportunities. Huge innovation in the energy sector – and the US Shale Revolution specifically — has manifested into new portfolio opportunities. The US cost of production of oil has fallen by 50% over the last five years, making the US now among the most competitive oil producers in the world. As a result, North America is expected to be completely energy independent by 2020. Our analysis of intangible-adjusted data reveals an innovation renaissance taking place among many of the resources companies of the Shale Revolution. Steve shares a new Knowledge Leaders Index created to take advantage of this opportunity as well as new and compelling valuations in these resource-heavy sectors.
2. Fixed income defense. We believe that the recent sell-off in bonds is overdone. Over the last months we saw a three-standard deviation move in US long bonds, an event that has occurred only six times in the last 50 years. Steve discusses 12 factors he expects to keep a lid on interest rates.