Speculation is no longer a recipe for success

Despite the bubbling uncertainty, 2021 was a wonderful year for markets as the bull
market continued its trajectory. Earnings recovered, dividends returned and the
reopening of the global economy outshone any concerns about supply chain
constraints or inflation. 

This was a terrific sign for Kera Van Valen, managing director and portfolio manager at Epoch Investment Partners, given she runs a strategy that revolves around identifying companies that can generate sustainable and growing free cash flows. 

2022 arrived and set a much different tone for markets, as rate hike forecasts were yanked forward. This has created a fog of scepticism towards blue-sky, speculative companies.

“Companies that are longer duration, with their cashflows and earnings further out into the future, are more vulnerable to the pressure that rising interest rates bring... adding in the headwinds from war within Ukraine, and you have got a lot of headwinds. The dividend (paying) and shorter duration assets have certainly been more rewarded"

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About Epoch Investment Partners

New York-based Epoch Investment Partners, Inc. (Epoch) was established in 2004. Its distinct investment philosophy based on the generation and allocation of free cash flow and integrated portfolio risk management differentiates Epoch from other global managers. Click here to find out more about their investment philosophy.