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These 3 Investment Management Stocks Could Keep Gaining in 2021 – Yahoo Finance

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The year commenced on an impressive note for Investment Management Industry (forms part of broader Finance sector), however, equities plummeted following the rapid spread of coronavirus in various countries including the United States, before taking the shape of a full-blown pandemic. The situation led to the intensified sell-off in March.

The crisis scenario warranted 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. These actions supported markets, and resulted in gains year to date.

Though most of the U.S. economic data were dismal, some better-than-expected interpretations in the later part of the year bolstered investor sentiment. Further, optimism surrounding the coronavirus vaccine has also been favorable. Therefore, the S&P 500 Index has recorded 14.62% gains year to date on strong rebound in equity markets.

Remarkably, stocks in non-U.S. equity markets have also rebounded, following massive declines in the first quarter. With overall industry inflows and solid investment performance, growth in assets under management (AUM) balance for majority of the industry players is anticipated. Thus, asset managers’ top line is likely to improve, supported by higher performance fees and investment advisory fees, which constitute the majority of their revenues.

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 including stringent regulatory scrutiny, near-zero interest rates and escalating costs; demand for new investment products at lower costs have been supporting the bottom line. Further, with heightened use of technology, asset managers have been able to enhance efficiency and operate profitably. Moreover, the rise in industry consolidation since the beginning of the year amid the pandemic is likely to offer support to investment managers’ profits.

Moreover, 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 pandemic induced uncertainty.

Though the impact of the COVID-19 pandemic on the investment management industry is visible, 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 are likely to 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 three investment management stocks carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy) with the market capitalization greater than $1 billion. Moreover, these stocks have recorded year-to-date gains of more than 20% and pay dividends that yield more than 1.50%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are the three stocks that met the criteria:

Boston, MA-based Eaton Vance Corporation EV is engaged in the creation, marketing, and management of investment funds in the United States.

Zacks Rank: #2
Market Capitalization: $7.73B
YTD Gains: 45%
Dividend Yield: 2.22%

Overland Park, KS-based Waddell & Reed Financial, Inc. WDR is a provider of investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States.

Zacks Rank: #2
Market Capitalization: $1.57B
YTD Gains: 50.4%
Dividend Yield: 3.98%

New York-based BlackRock, Inc. BLK is a publicly owned investment manager primarily providing services to institutional, intermediary, and individual investors including corporate, public, union, and industry pension plans, insurance companies, third-party mutual funds, endowments, public institutions, governments, foundations, charities, sovereign wealth funds, corporations, official institutions, and banks.

Zacks Rank: #2
Market Capitalization: $107.85B
YTD Gains: 40.6%
Dividend Yield: 2.05%

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Waddell & Reed Financial, Inc. (WDR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.

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More China coal investments overseas cancelled than commissioned since 2017

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More China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, research showed on Wednesday, highlighting the obstacles facing the industry as countries work to reduce carbon emissions.

The Centre for Research on Energy and Clean Air (CREA) said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period.

Coal-fired power is one of the biggest sources of climate-warming carbon dioxide emissions, and the wave of cancellations also reflects rising concerns about the sector’s long-term economic competitiveness.

Since 2016, the top 10 banks involved in global coal financing were all Chinese, and around 12% of all coal plants operating outside of China can be linked to Chinese banks, utilities, equipment manufacturers and construction firms, CREA said.

But although 80 gigawatts of China-backed capacity is still in the pipeline, many of the projects could face further setbacks as public opposition rises and financing becomes more difficult, it added.

China is currently drawing up policies that it says will allow it to bring greenhouse gas emissions to a peak by 2030 and to become carbon-neutral by 2060.

But it was responsible for more than half the world’s coal-fired power generation last year, and it will not start to cut coal consumption until 2026, President Xi Jinping said in April.

Environmental groups have called on China to stop financing coal-fired power entirely and to use the funds to invest in cleaner forms of energy, and there are already signs that it is cutting back on coal investments both at home and abroad.

Following rule changes implemented by the central bank earlier this year, “clean coal” is no longer eligible for green financing.

Industrial and Commercial Bank of China, the world’s biggest bank by assets and a major source of global coal financing, is also drawing up a “road map” to pull out of the sector, its chief economist Zhou Yueqiu said at the end of May.

 

(Reporting by David Stanway; Editing by Kenneth Maxwell)

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Bank of Montreal CEO sees growth in U.S. share of earnings

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Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.

“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”

($1 = 1.2145 Canadian dollars)

 

(Reporting by Nichola Saminather; Editing by Leslie Adler)

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GameStop falls 27% on potential share sale

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Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.

The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.

“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”

Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.

Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.

Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.

AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.

“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”

Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.

GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.

GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.

The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.

In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.

 

(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)

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