From the end of July through the middle of August, I set out on something closer to an expedition than a series of interviews. Across nearly 40 portfolio management teams spanning mutual funds, exchange-traded funds (ETFs), and separately managed accounts (SMAs) in large cap growth, large blend, and large value, I wasn't searching for soundbites. I was searching for buried treasure. Every team was given the same eight questions, carefully designed to eliminate shortcuts, strip away coaching, and create a level playing field where genuine insight could surface. The map was identical for everyone. What varied were the clues.

As

The S&P 500 index has seen impressive expansion in operating margins in recent years. Rolling back the clock, operating margins for the index averaged ~11.4% from 1991 through to 2009, with highwater marks set during the 90s and early 2000s notably below more recent averages. Structural drivers of expanding margins in the 90s included globalization, technology adoption, and the financialization of corporate America. Globalization allowed U.S. multinationals to shift labor-intensive manufacturing to lower-cost jurisdictions, compressing cost of goods sold while maintaining pricing power in domestic and developed markets. Supply chains beca

Friday’s slightly hot Consumer Price Index (CPI) report lifted the bond market’s odds of a rate hike from the Federal Reserve (Fed) this week to near 90%. The positive reactions from stocks and bonds were interesting, suggesting that perhaps market participants have been more worried about rate hikes than they should have been (though the S&P 500 is only about 2% off its all-time high). In this week’s Weekly Market Commentary, we explain how this market reaction makes sense based on history, provide perspective on the latest move up in rates, and share some reasons why the economy is more resilient in the face of rising

A compelling multi-year track record does exactly what it is supposed to do. It attracts attention, and ultimately garners inflows of new capital. This is not a criticism of successful managers but rather a description of the investment industry cycle. However, once new investor flows begin to arrive in size, the strategy that produced the track record and the strategy that is now being managed can shift dramatically.

The change is rarely, if ever, announced but instead tends to show up in small, defensible adjustments:

1. Position sizes that quietly grow to accommodate a larger asset base
2. Holdings that are added s