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October 2021

Market rotation favoring active management

By Active management No Comments

Respond to inflation: rate hikes, electricity and infrastructure pricing

We have written about the positive aspects of the economy and have been impressed by the faster GDP growth led by the consumer and manufacturing sectors. Inflation is an area we continue to monitor. We believe that much of the increase is not as transient as the Federal Reserve believes – in particular, higher wages and rental costs. But of late, the commodity complex has also picked up steam, including copper, lumber, coal, natural gas and crude. In fact, the price of brent crude is up + 277% from its pandemic low and 40% above its 5-year average.

Companies most exposed to inflationary pressures such as rising labor costs and supply shortages are looking for new ways to protect their bottom line. Stocks whose valuations are tied to future earnings are reassessed to account for inflation and rising costs of capital. The market is turning to inflation hedging opportunities such as regular dividend income, cyclical stocks that take advantage of recovery demand, relatively undervalued companies, and those with pricing power.

While increasing the capacity of supply chain infrastructure requires a lot of time and capital to build (think ships and factories), increasing labor capacity involves more to encourage individuals to re-enter the labor market. There are currently 11 million vacancies. While many have left the workforce during COVID, we believe they will eventually return to work and lead to above-trend GDP growth for next year. This strong growth is one of the main reasons the Fed may start to slow down and has indicated that it will likely do so in November or December. If inflation remains higher than their typical target of 2% (and currently Core PCI exceeds 6%), that’s another reason to reduce monetary accommodation. Despite the headwinds of the supply challenge, the economic recovery is fundamentally strong and we expect nominal GDP growth in 2021 to remain above trend. For perspective, the last four quarters have seen an annualized CAGR of 17% of nominal GDP. This shows how strong the demand is in our economy.

Uneven impact of inflation on profitability

Operating margins across all industries have rebounded significantly from pandemic lows. Corporate profits for certain industries, driven by higher demand and improved efficiency, could have a long run for continued margin expansion.

In an inflationary environment, pricing power, secular growth, and spending discipline are all important to a company’s ability to grow its margins – in addition to the specific nature of the industries in which they operate and the exposures. at inherent costs. Some firms exhibit these characteristics better than others and it is worth assessing the rate at which they can grow their profits organically, at this stage of the business cycle and in conjunction with their own microenterprise cycle. Although all sectors have improved their EBIT margins since the pandemic lows, cyclicals and financials have seen larger increases than non-cyclicals and Tech +.1

Cyclical sectors like energy, although impacted by rising labor costs, benefit from the higher price of their goods / services, the discipline of investment spending and the increased profitability of existing infrastructure. Other cyclicals, including industrials, saw their margins jump about 300% from pandemic lows thanks to strong pricing power and operating leverage.2 Financials, benefiting from strong commercial and banking activity, as well as from now rising yields, experienced a disproportionate rebound in their margins. Each of these economically sensitive sectors maintains higher fixed overhead costs and excess liquidity. Companies that exercise spending discipline and those that have invested in improving operational efficiency during the pandemic may be able to achieve these high margins for longer.

Non-cyclical technology companies, whose wages represent a substantial component of their total costs, are at a greater disadvantage than most other industries when it comes to absorbing inflationary pressures on prices and increasing their margins. There are certainly secular growth opportunities and attractive addressable markets within tech and non-cyclical stocks – and we use a barbell approach to portfolio management – but in today’s environment, due diligence and conviction more high are put forward.

As we watch the margins grow, we have to recognize that the marginal profit of one is the marginal loss of another. This is why the pricing power is so important – the ability to absorb higher costs and thereby achieve higher unit revenues. The higher costs tend to fall on the non-cyclical, with limited pricing power, and on the consumer who must measure the marginal utility of the good against its additional cost (elasticity of demand).

Our friends at Credit Suisse created the what-if analysis below using an industrial company to represent cyclicals and a tech company to represent non-cyclical stocks, and the impact of 10% inflation on their profits.3 It provides a good summary of the above:

Hypothetical impact of 10% inflation on corporate profits

ASSUMPTION: Inflation jumps 10% across the economy, including wages, input costs and consumer prices.

HYPOTHETICAL EXAMPLE:

Source: Credit Suisse

Investing in market rotation: our inclinations

Our portfolios have been oriented towards overweight cyclicals and secular growth technology companies throughout the period of economic recovery. We also maintained a bias in favor of quality balance sheets and excess free cash flow. As interest rates rise, the pace of yield curves increases and widening corporate debt spreads make it more costly for companies to raise new capital. Growth companies that rely on new capital to generate future profits, especially those with above-average valuations, are at greater downside risk in a market downturn and have less fuel for the market. growth. The economic recovery continues to be driven by consumer demand, the resumption of manufacturing and the decline in COVID cases. We believe the momentum favors undervalued cyclical companies that can grow organically in large, addressable markets with excess liquidity and pricing power.

Stéphanie Link: CNBC TV Program

Sources

  1. Swiss credit. “Tech +” includes Internet retailing (excluding cyclicals) and the Internet parts of communications services.

  2. Swiss credit

  3. Swiss credit

Disclosures

Investment Solutions at Hightower Advisors is a team of investment professionals registered with Hightower Securities, LLC, a member of FINRA / SIPC, & Hightower Advisors, LLC, an investment advisor registered with the SEC. All securities are offered by Hightower Securities, LLC and advisory services are offered by Hightower Advisors, LLC. This is not an offer to buy or sell securities. No investment process is risk free and there is no guarantee that the investment process described here will be profitable. Investors can lose all of their investments. Past performance is not indicative of current or future performance and does not constitute a guarantee. In preparing these documents, we have relied on and assumed without independent verification, the accuracy and completeness of all information available from public and internal sources; as such, neither the information nor the opinions expressed constitute a solicitation for the purchase or sale of any security. Hightower will not be responsible for any claims and will make no express or implied representations or warranties as to their accuracy or completeness or for any representations or contained errors or omissions on their part. This document was created for informational purposes only; the opinions expressed are solely those of the author and do not represent those of Hightower Advisors, LLC or any of its affiliates.

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In stock market cycles, active management can be a boon

By Active management No Comments

TThere is a lot of uncertainty in the market right now as concerns about interest rates, economic growth and inflation weigh heavily on the minds of investors. Uncertainty and volatility are environments in which active management typically outperforms, and T. Rowe Price has described current market climates as well as potential avenues to follow from there.

David Eiswert, CFA and portfolio manager at T. Rowe Price, recently wrote a white paper on the stock market cycle and the current state of the markets according to the company. Due to the economic shutdown, the strengthening of the Fed has led to an environment with little systematic risk, both now and potentially in the future if interest rates remain low and the pandemic continues to improve.

Right now, interest rates are low, asset prices are high, and there is no credit cycle to pressure and disrupt things. This has given rise to what Eiswert calls “negligent risk-taking in financial markets,” and he argues that this type of behavior is best approached through active management.

While there is general inflation in the labor market, there is always the question of whether it will become a permanent feature or whether it will increase. “While a certain degree of labor inflation is a good thing, an escalation would likely require a change in monetary policy that could potentially disrupt the cycle,” Eiswert said. The resumption of schools in the fall could play a mitigating role in the balance between labor supply and demand.

In addition to general labor market inflation, there are pockets of “absurd” inflation such as lumber, DRAM and used cars. This is a scenario where everyone loses because all assets fall; this is something that happened on a small scale in December 2018, explains Eiswert.

Added to this are the current interest rates, which are historically low. “We are wary of the level of interest rates today and believe that the price of treasury bills represents more of a hedge and aversion to risk than a precise indicator of the future economy,” Eiswert said. Although Eiswert believes interest rates should be higher, they should be kept within reasonable limits so as not to cause serious problems.

Active management can help thread the needle

With the pandemic, many growth stocks have enjoyed unprecedented gains that have not lost momentum even as economic reopening has become increasingly possible.

“Mega-capitalizing tech stocks have dethroned consumer staples and utilities as a source of defensive market positioning. We are seeing significant congestion and momentum in some of these growth areas, especially in PSPCs, IPOs, and MEMEs.2 actions, ”Eiswert explained.

This is a situation that Eiswert considers “dangerous” and where the benefits of active management can really shine by ensuring that only properly valued assets are invested. there is lower inflation than today, coupled with higher rates but which still maintain a status quo while remaining historically low.

This scenario could be created by the slowdown in the Chinese economy, the acceleration of COVID-19 cases from Delta (which would help slow the economic recovery) and the continued improvement in supply chain functionality. In this scenario, “absurd” inflation disappears and the growth of the economy stabilizes, creating an environment in which stock pickers thrive.

“Our goal is to hold stocks where we have a sense of improving economic returns while avoiding stocks that involve unnecessary risk and should be avoided. This is our role as bottom-up fundamental stock pickers, ”said Eiswert.

For more news, information and strategy, visit Active ETF Channel.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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In stock market cycles, active management can be a boon

By Active management No Comments

There is a lot of uncertainty in the market right now as concerns about interest rates, economic growth and inflation weigh heavily on the minds of investors. Uncertainty and volatility are environments in which active management typically outperforms, and T. Rowe Price has described current market climates as well as potential avenues to follow from there.

David Eiswert, CFA and portfolio manager at T. Rowe Price, recently wrote a white paper on the stock market cycle and the current state of the markets according to the company. Due to the economic shutdown, the strengthening of the Fed has led to an environment with little systematic risk, both now and potentially in the future if interest rates remain low and the pandemic continues to improve.

Right now, interest rates are low, asset prices are high, and there is no credit cycle to pressure and disrupt things. This has given rise to what Eiswert calls “negligent risk-taking in financial markets,” and he argues that this type of behavior is best approached through active management.

While there is general inflation in the labor market, there is always the question of whether it will become a permanent feature or whether it will increase. “While a certain degree of labor inflation is a good thing, an escalation would likely require a change in monetary policy that could potentially disrupt the cycle,” Eiswert said. The resumption of schools in the fall could play a mitigating role in the balance between labor supply and demand.

In addition to general labor market inflation, there are pockets of “absurd” inflation such as lumber, DRAM and used cars. This is a scenario where everyone loses because all assets fall; this is something that happened on a small scale in December 2018, explains Eiswert.

Added to this are the current interest rates, which are historically low. “We are wary of the level of interest rates today and believe that the price of treasury bills represents more of a hedge and aversion to risk than a precise indicator of the future economy,” Eiswert said. Although Eiswert believes interest rates should be higher, they should be kept within reasonable limits so as not to cause serious problems.

Active management can help thread the needle

With the pandemic, many growth stocks have enjoyed unprecedented gains that have not lost momentum even as economic reopening has become increasingly possible.

“Mega-capitalizing tech stocks have dethroned consumer staples and utilities as a source of defensive market positioning. We are seeing significant congestion and momentum in some of these growth areas, especially in PSPCs, IPOs, and MEMEs.2 actions, ”Eiswert explained.

This is a situation that Eiswert considers “dangerous” and where the benefits of active management can really shine by ensuring that only properly valued assets are invested. there is lower inflation than today, coupled with higher rates but which still maintain a status quo while remaining historically low.

This scenario could be created by the slowdown in the Chinese economy, the acceleration of COVID-19 cases from Delta (which would help slow the economic recovery) and the continued improvement in supply chain functionality. In this scenario, “absurd” inflation disappears and the growth of the economy stabilizes, creating an environment in which stock pickers thrive.

“Our goal is to hold stocks where we have a sense of improving economic returns while avoiding stocks that involve unnecessary risk and should be avoided. This is our role as bottom-up fundamental stock pickers, ”said Eiswert.

For more news, information and strategy, visit Active ETF Channel.

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Federal Bank, partner of CredAvenue to offer portfolio management of its securitization portfolio

By Portfolio management No Comments

CredAvenue has partnered with the Federal Bank for the portfolio management of its securitization portfolio. As part of the alliance, Federal Bank will digitally monitor its ABS and MBS pool assets, through CredAvenue’s end-to-end securitization and portfolio buyout and execution solutions platform, CredPool.

Post-trade execution services are currently manual and asset quality assessment is only performed at the end of each quarter. Through this partnership, Federal Bank intends to use CredAvenue’s technology for real-time valuation and digital monitoring capabilities for its securitization book.

“In the type of environment we find ourselves in, it’s always important to look for the right opportunities. While we have the opportunity to grow via the inorganic route with the right kind of mix, the capacity of the platform is important to manage such a portfolio. This arrangement will help the Federal Bank to standardize and automate the securitization portfolio. In addition, it will help the bank to assess and invest in the right opportunity based on risk appetite, ”said Shalini Warrier, ED & Head Retail Business, Federal Bank.

“We provide a Complete Originator Debt Ecosystem (NBFC) and provide a complete execution solution for all lenders associated with us. Our technology has the ability to provide personalized solutions based on the requirements of each bank / lender for the management of their portfolio. Our team ensures fast and seamless integration with an easy to use interface for our partners, ”said Gaurav Kumar, CEO, CredAvenue.

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Project Portfolio Management Systems Market – Major tech giants in the buzz again

By Portfolio management No Comments

Global Project Portfolio Management Systems Market (Pre-Post Covid-19) Size analysis and forecast until 2029: The Global Project Portfolio Management Systems Research Report on the Project Portfolio Management Systems Market is the product of a brief review and in-depth analysis of the realistic data collected from the Global Project Portfolio Management Systems Market 2021. The data was collected on the basis of manufacturing drifts of the project portfolio management systems and requests related to services and goods.

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Due to the increase in partnering activities of major players in the Project Portfolio Management Systems industry during the projected period, North America accounted for the share of $ xxx million in the systems market. of project portfolio management in 2021.

Main project portfolio management systems Key players included in this research: Micro Focus, Planisware, Upland Software, Microsoft, Hexagon, Oracle, Workfront, One2Team, Planview, SAP SE, Sciforma, Clarizen, Cerri, ServiceNow, Changepoint, Broadcom, Sopheon, KeyedIn Projects

Main types and Applications present in Project Portfolio Management Systems Market as follows:

[Segments]

A flawless example of the latest developments and revolutionary strategic changes enables our clients to improve their decision-making skills. Ultimately, this makes it possible to work with perfect business solutions and execute innovative implementations. The Global Project Portfolio Management Systems Market 2020-2029 The report highlights the latest trends, growth, new opportunities and latent tips.

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In addition to statistics relating to project portfolio management systems, most of the data obtained is presented in graphical form. The global Project Portfolio Management Systems market study shows in detail the functioning of the major market players, manufacturers and distributors. The study also describes the restrictions and factors that influence global demand for Global Project Portfolio Management Systems Market.

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Frequently Asked Questions:

  • How fast is the Project Portfolio Management Systems market expected to grow?

Year-over-year growth for 2021 is estimated at XX% and the market incremental growth is expected to be $ xxx million.

  • Who are the major players in the Project Portfolio Management Systems market?

Micro Focus, Planisware, Upland Software, Microsoft, Hexagon, Oracle, Workfront, One2Team, Planview, SAP SE, Sciforma, Clarizen, Cerri, ServiceNow, Changepoint, Broadcom, Sopheon, KeyedIn Projects

  • What are the main drivers and challenges of the market?

The demand for ASW capacity building is one of the major factors driving the Project Portfolio Management Systems market.

  • What is the size of the North America Project Portfolio Management Systems market?

North America region will contribute XX% of the project portfolio management systems market share

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This helps to understand the overall market and recognize growth opportunities in the global Project Portfolio Management Systems Market. The report also includes detailed profile and information of all major Project Portfolio Management Systems market players currently active in the global Project Portfolio Management Systems Market. Companies covered by the report can be assessed on the basis of their latest developments, financial and business overview, product portfolio, key trends in the Project Portfolio Management Systems market, long-term and short-term business strategies of companies in order to remain competitive in the project portfolio management systems market.

Regions & Countries Mentioned In The Project Portfolio Management Systems Market Report:

Project portfolio management systems industry North America: United States, Canada and Mexico.
Project portfolio management systems industry South and Central America: Argentina, Chile and Brazil.
Project portfolio management systems industry Middle East and Africa: Saudi Arabia, United Arab Emirates, Turkey, Egypt and South Africa.
Project portfolio management systems industry Europe: United Kingdom, France, Italy, Germany, Spain and Russia.
Project portfolio management systems industry Asia Pacific: India, China, Japan, South Korea, Indonesia, Singapore and Australia.

The Project Portfolio Management Systems report analyzes various critical restraints such as item price, production capacity, profit and loss statistics, and transportation and delivery channels influencing the global market. It also includes the consideration of such important items as market demands, product trends and developments, various organizations and effect processes in the global market.

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A methodically organized Project Portfolio Management Systems market analysis study is based on primary and secondary tools. It illustrates the collected data in a more communicative and descriptive way, encouraging the consumer to develop a well-structured strategy to grow and improve their business in the expected time.

Find more research reports on the Project Portfolio Management Systems industry. By JC Market Research.

About the Author:

The global market intelligence and research consultancy JCMR is uniquely positioned to not only identify growth opportunities, but also empower and inspire you to create visionary growth strategies for the future, through our extraordinary depth and breadth of thought leadership, research, tools, events and experience. that help you make your goals a reality. Our understanding of the interplay between industry convergence, megatrends, technologies and market trends provides our clients with new business models and opportunities for expansion. We are focused on identifying ‘accurate forecasts’ in each industry we cover so that our clients can take advantage of early market entrants and meet their ‘goals and objectives’.

Contact us: https://jcmarketresearch.com/contact-us

JC MARKET STUDY

Mark Baxter (Business Development Manager)

Telephone: +1 (925) 478-7203

Email: sales@jcmarketresearch.com

Connect with us on – LinkedIn

www.jcmarketresearch.com

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Future Scope of Real-Time Work Management Software Market Including Key Players Toggl, Scoro, Mavenlink – Amite Tangy Digest

By Work management No Comments

JCMR Recently announced World Cup Real-time work management software Market Report 2021 is an objective and in-depth study of the current state targeting key drivers, market strategies and growth of key players. The Real Time Labor Management Software study also involves the significant market achievements, research and development, new product launches, product responses, and regional growth of the major competitors operating in the market at scale. universal and local. The structured analysis contains a graphical representation as well as a schematic representation of the global real-time labor management software market with its specific geographies including the following key players Toggl, Scoro, Mavenlink, E Works Manager, Eg solutions plc, Wrike Inc ..

[Due to the pandemic, we have included a special section on the Impact of COVID 19 on the @ Market which would mention How the Covid-19 is Affecting the Global Real-time Work Management Software Market

 

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Real-time Work Management Software Report Overview:

The Global Real-time Work Management Software Market report comprises a brief introduction of the competitive landscape and geographic segmentation, innovation, future developments, and a list of tables and figures. Competitive landscape analysis provides details by vendors, including company overview, company total revenue (financials), market potential, global presence, and revenue, market share, price, production sites and facilities, SWOT analysis, product launch. The next section focuses on industry trends where market drivers and top market trends are shed light upon. The report offers production and capacity analysis where marketing pricing trends, capacity, production, and production value of the Real-time Work Management Software Industry. This report investigates market-based on its market fragments, chief geologies, and current market patterns.

Geographical Analysis for Global Real-time Work Management Software Market:

 

•             Real-time Work Management Software industry North America: United States, Canada, and Mexico.

•             Real-time Work Management Software industry South & Central America: Argentina, Chile, and Brazil.

•             Real-time Work Management Software industry Middle East & Africa: Saudi Arabia, UAE, Turkey, Egypt and South Africa.

•             Real-time Work Management Software industry Europe: UK, France, Italy, Germany, Spain, and Russia.

•             Real-time Work Management Software industry Asia-Pacific: India, China, Japan, South Korea, Indonesia, Singapore, and Australia.

 

Real-time Work Management Software Market Analysis by Types & Applications as followed:

[Segments]

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The Real Time Labor Management Software industry report throws light on the global Real Time Labor Management Software market factors such as drivers, opportunities, and restraints. The Real Time Work Management Software industry report identifies high growth areas along with growth factors which help to dominate the segments. The study of the real-time labor management software covers the analysis of the downstream and upstream value chain, technical trends and the analysis of the five forces of the bearer. Real-Time Labor Management Software report also provides the company rankings with respect to revenue, profit comparison, cost competitiveness, market capitalization, company growth and value chain. of the market.

The key areas that have been focused on the Real Time Work Management Software report:

  • Key trends seen in the global real-time labor management software market
  • Real-Time Labor Management Software Market and Pricing Issues
  • The extent of commercialization of real-time work management software in the market
  • Real-time work management software Geographic limitations
  • Real-time labor management software related to industry Distribution, planning, performance and supplier requirements
  • Growth opportunities that may emerge in the real-time labor management software industry in the years to come
  • Growth strategies envisaged by real-time work management software players

The report offers a top view of various factors driving or hindering the development of the Global Real-Time Work Management Software Market. Besides, it offers insight into each market segment, such as end user of real-time labor management software, product type of real-time labor management software, application of management software real-time labor area and real-time labor management software. The Real Time Labor Management Software company profile includes product portfolio analysis, revenue, SWOT analysis, carrier analysis and the latest developments of the Real Time Labor Management Software related company. Real Time Labor Management Software report pays attention to the production, revenue, price and gross margin in the markets of different regions.

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Find more research reports on Real-time work management software industry. By JC Market Research.

About the Author:

The global market intelligence and research consultancy JCMR is uniquely positioned to not only identify growth opportunities, but also empower and inspire you to create visionary growth strategies for the future, through our extraordinary depth and breadth of thought leadership, research, tools, events and experience. that help you make your goals a reality. Our understanding of the interplay between industry convergence, megatrends, technologies and market trends provides our clients with new business models and opportunities for expansion. We are focused on identifying ‘accurate forecasts’ in each industry we cover so that our clients can take advantage of early market entrants and achieve their ‘goals and objectives’.

Contact us: https://jcmarketresearch.com/contact-us

JCMARKETRESEARCH

Mark Baxter (Business Development Manager)

Telephone: +1 (925) 478-7203

E-mail: sales@jcmarketresearch.com

Connect with us at – LinkedIn

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Eaton Vance Management Announces Changes to the Portfolio Management Team of Certain Municipal Closed-End Funds

By Portfolio management No Comments

BOSTON, October 1, 2021 / PRNewswire / – Eaton Vance Management (“EVM”), investment advisor to the closed-end funds listed below (the “Funds”) has announced that Julie P. Callahan, CFA and William J. Delahunty, Jr., CFA have joined the portfolio management team of certain Funds. Effective October 1, 2021, the members of the portfolio management team of each Fund are as follows:

Funds

Portfolio management team As of October 1, 2021

Eaton Vance Municipal Bond Fund (US NYSE: EIM)

Cynthia J. Clemson and Julie P. Callahan

Eaton Vance National Municipal Opportunities Trust (NYSE: EOT)

Cynthia J. Clemson and William J. Delahunty, Jr.

Eaton Vance Municipal Income Term Trust 2028 (NYSE: ETX)

Craig R. Brandon and Julie P. Callahan

Eaton Vance Municipal Income Trust (NYSE: EVN)

Cynthia J. Clemson and William J. Delahunty, Jr.

Eaton Vance New York Municipal Bond Fund (US NYSE: ENX)

Christophe J. Eustance

Eaton Vance California Municipal Income Trust (US NYSE: CEV)

Trevor Smith

Eaton Vance California Municipal Bond Fund (US NYSE: EVM)

Trevor Smith

Ms. Callahan has been Vice President of EVM since September 2021 and has been Managing Director of Morgan Stanley Investment Management Inc. (“MSIM”), a subsidiary of EVM, since 2020. Prior to joining MSIM, she was a senior member of the municipal bond portfolio management team at PIMCO de 2011 to 2020..

Mr. Delahunty is Vice President of EVM and joined the municipal team of EVM in 1998.

About funds

Eaton Vance applies in-depth fundamental analysis to the active management of equity, income, alternative and multi-asset strategies. Eaton Vance’s investment teams follow proven investment principles that focus on continuous risk management, tax management (where applicable) and the pursuit of consistent long-term returns. The company’s investment capabilities span global financial markets. With a history dating back to 1924, Eaton Vance is headquartered in Boston and also maintains investment offices in new York, London, Tokyo and Singapore. For more information, visit evmanagement.com. Eaton Vance is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley.

Closed-end fund stocks often trade at a discount to their net asset value. The market price of the shares of the Fund may vary from the net asset value depending on factors affecting the supply and demand of shares, such as the distribution rates of the Fund compared to similar investments, investors’ expectations regarding future distribution changes, the clarity of a Fund’s investment strategy and investor return expectations and confidence in the underlying markets in which a Fund invests. Shares of the Fund are subject to investment risk, including the possible loss of invested capital. A Fund is not a complete investment program and you can lose money by investing in it. An investment in a Fund may not be suitable for all investors. Before investing, potential investors should carefully consider the Fund’s investment objective, strategies, risks, charges and expenses.

This press release is provided for informational purposes only and is not intended to constitute, and does not constitute, an offer to buy or sell shares of any Fund. Additional information about the Funds, including information on the performance and characteristics of the portfolio, is available at eatonvance.com.

Statements in this press release that are not historical facts may be forward-looking statements, as defined by United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements, as they are subject to uncertainties and other factors which may be beyond the control of a Fund and could cause actual results to occur. differ materially from those set forth in forward-looking statements.

SOURCE Eaton Vance Management

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www.eatonvance.com

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Investor returns, misperceptions and the art of active management

By Active management No Comments

The last Watch out for the gap Morningstar research shows that over the past decade, investors have lagged equivalent market returns by an average of 1.7% per year.

Complete this over a period of 10 years or more, and you’ll end up giving up a lot of money!

In 2011, a study by DALBAR’s Quantitative and Investor Behavior Analysis (QAIB) group showed that over the previous two decades, the average investor in a mutual fund had underperformed the S&P 500 Index by 4.3% per year, while investors in bond funds lagged the Barclays US Aggregate Bond Index by up to 5.5% per year.

Before the 2000s, investor returns were even worse. While performance over the past decade has arguably been less severe, consistent underperformance persists.

Why such bad results?

Excessive fees, heuristic-backed processes, lack of repeatability, and misalignment of interests are perhaps some of the main reasons for poor long-term results for clients.

The biggest cost to clients, however, has been the ‘timing and selection penalty’ – the cost of investing in a fund after a period of good performance and then selling it after a period of good performance. period of poor performance.

Poor execution is primarily the result of behavioral biases, a topic frequently discussed, but rarely practiced.

The market – or more specifically, parties with a particular interest, which include consultants, custodians, trustees, third-party research providers, wealth managers, and even academics – have come up with solutions to overcome the poor performance of financial institutions. clients.

Generally recognized and accepted solutions include the diversification of specific security risks, the use of passive indexation strategies and the systematic rebalancing of investor portfolios.

Taking them at face value is, in our opinion, misguided and in fact increases some risk without addressing the fundamental problem.

Below, we discuss the factors that we believe are crucial to achieving strong and consistent long-term results.

A significant amount of evidence shows that fund flows follow performance.

A typical fund investment is only three years, which we believe is far too short to prove or disprove a manager’s competitive advantage, or even sustainability.

Indeed, performance over a period of three years or less is mainly impacted by asset allocation factors.

All of these factors can be managed through better and more in-depth fundamental research: a better understanding of the intrinsic value of the security – or fund – in which you invest and how that intrinsic value composes over time.

This should allow investors to better understand their safety margin, manage downside risk and allocate capital more efficiently.

Ultimately, better long-term results while involving less short-term risk are possible.

However, it requires a willingness to be different; a portfolio of high conviction and quality; efficient capital allocation, underpinned by a fundamental understanding of intrinsic value… and patience!

Ernst Knacke is Head of Research at Shard Capital

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