Asset managers around the globe face increasing pressure on management fees since the performance of the average active manager is in a number of cases worse than the performance of their passive peers. One reason for this underperformance can be attributed to the level of fees and expenses charged by active managers since the underperformance is often somewhat similar to the total expense ratios of the respective funds. It is, therefore, not surprising that these management fees are under scrutiny and that investors put pressure on active managers to pass over economies of scale by reducing the management fee once

Patrick Drahi’s financial engineering makes Europe’s other telecom bosses seem idle. A 30 billion euro debt pile admittedly forces the founder and controlling shareholder of Altice to be creative. The tycoon has nonetheless come out top from his latest sale. Altice on Friday said it had agreed to sell just under half of a unit that’s building fast-broadband lines in France to funds managed by insurers Allianz  and AXA and a Canadian pension manager for 1.8 billion euros. The unit will build connections reaching at least 1 million homes each year for the next four years, focusing on less populous regions of France.

Return on equity (ROE), a measure of profitability in relation to the equity in a business, is another popular metric that can mislead investors. From its reliance on accounting earnings to its susceptibility to manipulation (often to benefit executive compensation), ROE lacks the necessary analytical rigor to support diligent investment decisions. Investors that rely on ROE are in the Danger Zone. Unattractive Stocks with Misleading “Profitability” For a number of reasons that we’ll discuss below, ROE can make companies appear much more profitable than they truly are. Figure 1 highlights the five Unattractive-or-worse rated stocks with the most misleading ROEs in

Target deserves as much investor love as Walmart. Owners of the Minneapolis-based retailer sent shares down as much as 11 percent on Tuesday morning after the retailer missed estimates by a hair. Yet online revenue soared, and same-store sales held their own. Giving Target the cold shoulder makes little sense. The company known for its bull’s-eye logo said more people were buying paper towels, sheets and detergent at comparable outlets during the third quarter than they were a year ago. Also encouraging was a nearly 50 percent lift in e-commerce sales. Overall that boosted the top line by 5.6 percent

Elon Musk is finally getting his adult supervision. Robyn Denholm, finance chief at Australian telecom operator Telstra, will move from her boardroom seat at Tesla to the head of the table – and oversee the $60 billion electric-car maker’s erratic chief executive full-time. She will have to get tougher, though. Having an independent chair is a plus, even if it was forced on Musk by the U.S. Securities and Exchange Commission. A regulatory settlement followed his excessively confident public statements about a potential deal to take Tesla private. The company has plenty on its plate, from the hands-on task of ramping

Big Oil is at risk of flaring its profit bonanza. Exxon Mobil and Chevron posted their highest quarterly cash flow since the days of $100 crude as higher prices helped them squeeze more out of each barrel pumped. Texas drills are humming and areas like Guyana are booming. But price rises may not last and investors are demanding greater returns. The $340 billion Exxon pumped 57 percent more out of West Texas’ Permian Basin in the quarter compared with the same period last year, and continues to make new discoveries offshore in Guyana. Overall production fell, but each barrel pumped

Looking at the headline figures, the first nine months of 2018 seem to have been rough for the European fund industry. Even though the assets under management (AUM) (€10.7 tr) increased over the course of the year so far, the industry failed to attract significant new money. The net fund flows stood at €5.9 bn at the end of September. A closer view of the underlying trends shows that European investors have started to pull out money from bond funds and surprisingly also from money market products. The general fund-flow trends are a reaction of European investors to the recent

Before Donald Trump’s election victory in 2016, we set out two economic scenarios for the global economy: Trump Lite and Donald Dark. With fiscal stimulus implemented, business confidence close to record highs, GDP growth strong and some radical proposals canned, we are in a Trump Lite world. But with Sino-US trade tensions moving beyond the threat phase and continuing to escalate, we have taken a step towards our Donald Dark scenario. We have previously likened the trade negotiations to a game of chicken, which we expected the US to win; our China Exposure Index (CEI) suggests that, until recently, investors held

Diverse and inclusive workplaces are not only ethical but also good business. Investors are increasingly looking for companies which have good Diversity and Inclusion ratings to ensure they are investing in companies with diverse ideas. Our Diversity and Inclusion ratings give investors transparent and standardized metrics to analyze companies. Increasing numbers of companies are reporting on their diverse and inclusive work practices. Diversity and Inclusion metrics create our diversity and inclusion index. The Index offers an innovative benchmark for fund managers and investors wishing to commit capital to companies that actively invest in and promote environmental, social and governance values

Campbell Soup’s lukewarm sales pitch is begging for a real cook. The $12 billion canned food and snack company is trying to sell its fresh and international brands while stepping up cost cuts on its stagnant core business. It is leaving the door open for a sale, but that’s unlikely to appease activists like Third Point’s Dan Loeb. The New Jersey-based prepared foods outfit has had a difficult run. Chief Executive Denise Morrison quit abruptly in May after leading a string of questionable acquisitions, and the company launched a strategic review under an interim CEO. Meanwhile its main businesses are

The price of crude oil is volatile. Our first chart shows the price of a barrel of Brent crude since the early 1970s, adjusted for inflation. In real terms, oil prices, which had been broadly stable for more than a decade, rose by a factor of six between the late 1990s and the late 2000s, only to plummet as the global financial crisis hit, rebound as the recovery began, and fall sharply again through 2014 and 2015 as investors rightly became concerned by the pace of China’s slowdown. At the time of writing, Brent crude is trading around $75 a

Every now and then some market risks capitalize and lead to falling prices that hit mutual funds—and therefore their investors—with losses to their portfolios. These market events are a moment of truth for investors, since in some cases they unveil that the particular fund has been exposed to risks that might not have been anticipated by investors. One of these moments happened on Tuesday, May 29, 2018. The spreads for Italian bonds widened when the designated prime minister resigned after he failed to build a government when his proposed finance minister was vetoed by the country’s president. With regard to