For Immediate Release
Chicago, IL – September 10, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Eaton Vance Corp. (EV - Free Report) , Federated Hermes, Inc. (FHI - Free Report) , Lazard Ltd. (LAZ - Free Report) and Principal Financial Group, Inc. (PFG - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
4 Solid Value Picks from Investment Management
The year started on an impressive note for the Investment Management Industry (forms a part of the broader Finance sector). However, equities fell on the rapid spread of coronavirus in various countries including the United States, taking the shape of a pandemic later. The situation led to the intensified sell-off in March.
This was followed by radical actions by the Federal Reserve, and the Trump administration and Congress, which enhanced the financial market liquidity and aided the flow of credit to consumers and businesses. Therefore, this supported markets as well, resulting in gains during second-quarter 2020.
Though most of the U.S. economic data were dismal, some better-than-expected interpretations in the later part of the quarter boosted investor sentiment. Therefore, the S&P 500 Index has recorded 3.13% gains year to date on strong rebound in equity markets.
Remarkably, stocks in non-U.S. equity markets also rebounded in the second quarter, following the massive declines in the first. With overall industry inflows and solid investment performance, growth in assets under management (AUM) balance for majority of the industry players is anticipated. However, the near-term outlook remains uncertain due to year-end seasonality.
Despite the prevailing global concerns, the U.S. economy is witnessing steady improvement. This, combined with growing demand for personalized investment products, is anticipated to open up growth opportunities for the asset management industry.
While asset managers have been facing a number of challenges like stringent regulatory scrutiny and escalating costs, demand for new investment products at lower costs keeps supporting the bottom line. Further, with heightened use of technology, asset managers have been able to enhance efficiency and operate profitably.
In addition, though retail investors continue to park funds with investment managers, institutional investors have been shying away. Another factor leading to inflows is that Americans have started saving more (and spending less) as the economy remains uncertain on the prevailing pandemic-related crisis. Hence, the investment management industry is getting more funds from retail investors.
Weakness of the U.S. dollar is also driving the global diversified assets mix. Though active managers are striving hard over passive managers, they have recorded growth in asset classes including international small-cap equity and core fixed income. Notably, fixed income generated positive returns as investors ran for safe-haven assets due to the prevailing global growth concerns and the uncertainty caused by the pandemic.
While it is too early to measure the full impact of the COVID-19 pandemic on the investment management industry, a second wave of the pandemic in certain countries might result in heightened market volatility once again. Nonetheless, at present, the sector seems to be better equipped to deal with systemic jolts. Overall, investment management companies will likely come up with a value proposition, under which both performance and fees meet clients’ increasing demands.
Here is how to play the industry:
Stocks Worth Buying Now
While the concerns should not be overlooked, one can consider buying stocks as the industry provides an entry point with stocks being undervalued, currently. With the help of the Zacks Stock Screener, we have zeroed in on four investment management stocks carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy) and Value Score of ‘A’ or ‘B’. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are the four stocks that met the criteria:
Boston, MA-based Eaton Vance Corp. is engaged in the creation, marketing, and management of investment funds in the United States.
Zacks Rank: #2
Value Score: B
Pittsburgh, PA-based Federated Hermes, Inc. is a publicly-owned asset management company providing services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit-sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors with additional offices in New York City and London, the U.K.
Zacks Rank: #2
Value Score: A
Hamilton, Bermuda-based Lazard Ltd. operates as a financial advisory and asset management firm in North America, Europe, Asia, Australia, and Central and South America.
Zacks Rank: #2
Value Score: A
Des Moines, IA-based Principal Financial Group, Inc. is a provider of retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients globally.
Zacks Rank: #2
Value Score: A
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