Innovative companies in the health and wellness space are growing quickly as consumers develop an appetite for products from organic chicken to omega-3 supplements. RS Growth analyst Lesley Bunim tells us why this powerful consumer trend has room for growth.

RS Growth analyst Paul Leung frames powerful themes in the tech industry: mobile, cloud computing and staying disciplined through boom and bust cycles.

May 2013

Learn about the most recent investment opportunities in natural resources from portfolio managers MacKenzie Davis and Ken Settles. They share their outlook for natural resource equity returns given the current market environment and insights from the investment team's recent research trips around the globe.

The RS Emerging Markets team talks about uncovering opportunities and understanding risks in emerging market economies.

November 2012

Learn the current state of natural resource equities, specifically focusing on the three sources of potential returns. And, Portfolio Managers MacKenzie Davis and Ken Settles share their latest insights from the investment team's recent research trips around the globe.

Investors cite diversification as being a primary rationale for including real assets in a portfolio. However, thus far there have been few studies that compare the effectiveness of the various real asset alternatives in terms of the diversification benefits that they provide.

In this paper, co-authors MacKenzie Davis and Ken Settles compare the diversification benefits provided by commodities futures and natural resource equity strategies by disaggregating total returns into individual sources and then comparing these unique factors with the broader equity market over varying measurement periods. By extending the measurement period to reflect more realistic holding periods, it is illustrated that natural resource equity strategies can provide diversification benefits that are similar to those offered by commodities futures strategies with the potential for superior returns.

Learn about the RS Growth Strategies from Portfolio Managers Steve Bishop,
Melissa Chadwick-Dunn and Steve Bishop.

This webcast focuses on the background and calculation of active share, offering insight into how the measure can serve as a useful tool when assessing active managers.

RS Investments welcomed Paul Leung, CFA to the Growth team in March. He will cover software, internet, and technology services in conjunction with Portfolio Manager and technology analyst Steve Bishop.

This Research Paper describes the Active Share concept, which measures the degree of active management within a mutual fund by comparing the weights of a fund's holdings vs. the corresponding weights in the benchmark. A high Active Share score identifies mutual funds that differ from their respective benchmarks, signifying a a high degree of active management. Other highlights of the paper include:  

• Origins of Active Share
• Quantifying the value of high Active Share
• Using Active Share with other measures of performance such as R-squared and Tracking Error

RS Investment team members discuss relevant investment topics in recently published videos.

Members of the RS Hard Assets team discuss RS' approach to extracting value from natural resource equities.

This paper presents the academic and empirical evidence in support of a high-conviction, low-turnover investment approach to managing equities in an increasingly short-term oriented market. 

Advantages of a high-conviction, low-turnover approach cited in this paper include:

• Fewer holdings support deep understanding of portfolio companies and factors that influence their long-term business values
• Longer holding periods allow ample time for its intrinsic value to be fully reflected in company's
  underlying stock price
• Evidence of historical risk-adjusted return benefits

Recent academic studies support the case for active management by introducing the concept of active share. A high active share indicates that a fund's investments significantly differ from its benchmark, while a low active share, or "closet index" fund's investments largely mirror the benchmark index. In this primer, RS Investments explains how active share can serve as a useful measure for understanding the extent to which a manager is deviating from an index, and potentially outperforming it.

In the past 30 years, the bank loan market has gone from a small secondary market with customized agreements between bank and customer to an asset class with nearly $1.6 trillion in assets. The current low interest rate environment has garnered a lot of attention for bank loans because, unlike most fixed-income instruments, yields on bank loans adjust periodically based on current interest rates, offering investors greater price stability in a rising rate environment.

This research piece introduces and explains the features of bank loans while exploring their recent history and identifying the sources of short-term volatility. We believe this will provide investors with background on this asset class and the information needed to determine how bank loans can potentially fit into a diversified investment portfolio.

Innovative products and services are addressing healthcare's woes head-on and creating investment opportunities in the process. In this Q&A, RS Growth co-portfolio manager Melissa Chadwick-Dunn and analyst Chris Clark discuss their views on the long-term growth potential for these innovating companies and explain their Team's process for uncovering them.

In part one of this two part series exploring investing in real asset strategies, co-authors MacKenzie Davis and Ken Settles examine how changing global economic fundamentals have altered the following key drivers of return in passive commodity strategies: spot price, roll yield, and collateral. The paper covers the historical rationale for an investment in commodities and how an investment in natural resources could be equally complementary in providing:

• Diversification
• Inflation protection
• Potential for improved returns

In part two of this two part series exploring investing in real asset strategies, co-authors MacKenzie Davis and Ken Settles examine an investor's options for investing in real assets through Private Equity and Public Equity strategies. The paper particularly focuses on the characteristics that differentiate private equity investors and public equity investors in natural resource companies and what the benefits to be derived from a private equity investment approach in the public markets are. Key points addressed are:

• The advantages of an equities approach to investing in real assets
• How investors can access unique sources of returns
• How public equity strategies and private equity strategies can prove to be complementary

In this paper, co-authors MacKenzie Davis and Ken Settles examine different forms of commodity price-driven inflation. Investors have allocated over $350B to commodities in part to help protect against inflation. But what types of inflation are investors trying to hedge against and are direct investments in commodities the most effective way to protect investors from inflation? In this paper we examine different forms of commodity price-driven inflation as well as some ways which institutional investors can potentially help protect their portfolios from longer-term increases in commodity prices.

In this Research Paper, Steve Bishop, portfolio manager of the RS Technology Fund, highlights why he believes the current environment may provide a historic opportunity to allocate to innovative technology companies across the market cap spectrum. 

The Research Paper reviews:

• The Investment Case for Technology: Finding well-capitalized and less-volatile technology companies trading at historically low valuations
• Themes: Key Technology Innovations Altering the Global Landscape – Virtualization and cloud computing,
  security and storage, emerging market consumer, and social media
• RS Technology Fund: Seeking a return on innovation across the market cap spectrum

In this Q&A, the RS Value Team's Financials Pod discusses its views on opportunities within banking following the financials crisis. They identify what they believe to be an exceptional opportunity to invest in high-quality banking franchises at or below their downside estimation of these firms' warranted value. The Team also reveals how the RS Value Team's Return on Invested Capital (ROIC)-based philosophy translates into their work within financials, walking through the steps by which they identified an investment opportunity within regional banks.

In this Research Paper, Alex Grant, portfolio manager of the RS Tax-Exempt Fund and RS High Yield Municipal Bond Fund, discusses the state of the municipal bond market. The municipal bond market is explored from a historical and current perspective, and aims to provide an insight into how municipal bonds can offer compelling investment potential for investors.
The paper covers the following topics:

• An explanation of the municipal bond hierarchy
• The growth of the municipal bond market; the effect of the global recession, and the introduction of Build America Bonds (BABs)
• Measuring the value of municipals
• Credit spreads, with comparisons made between municipals and treasury bonds
• Municipal bankruptcies and defaults
• The benefits that municipal bonds can potentially offer investors

Spring 2009

Authored by MacKenzie Davis and Ken Settles, co-portfolio managers of RS Global Natural Resources Fund, RS Global Natural Resources Long/Short Equity Strategy, and related institutional composites, this White Paper discusses the value in resource-related stocks and their role over the next decade. This paper will address the following questions:

• Where are we in commodity price cycles?
• What is the outlook for natural resources?
• Why invest in natural resources?
• What are the potential benefits of investing in actively managed, value-oriented fundamental
  equity strategy versus other natural resource investment vehicles?

Authored by the RS Value Team, this White Paper discusses the key tenet of the Team's investment philosophy - the significant correlation between a company's improving returns on invested capital and its stock performance over longer periods of time. The paper covers the following topics:

• The correlation between improving ROIC and company performance
• Calculating ROIC and understanding its value
• Management mind-set and capital allocation decisions 
• Finding companies with improving ROIC 
• Putting theory into practice: RS Investments' Value Process
• ROIC in action: how a change in leadership can signal ROIC improvements