Past Events


“Who’s Gonna Win?”

Dr. Andrew Reeves, Director of the Weidenbaum Center, Professor of Political Science & Author

May 8 Speaker Summary By Alec Hubbard, CFA

Something that can be difficult to remember in 2024 is that the United States finds itself in the midst of a presidential election. Given the potential for federal policy to influence market outcomes, analysts in the financial services industry find themselves stuck with the same question that regularly bothers sports fans and horse bettors alike:

“Who’s gonna win?”

On May 8, 181 days until the U.S. 2024 presidential election, CFA Society St. Louis heard from Director of the Weidenbaum Center, Professor of Political Science and author Andrew Reeves who gave the local analyst community a greater context and understanding of the nuances surrounding the presidential race.

               Professor Reeves began by pointing out the historical anomaly that the election presents. For the first time since 1912, when Teddy Roosevelt introduced the country to the short-lived Bull Moose Party to run against President Howard Taft, two men who have held the office of President of the United States will run against each other. Should Donald Trump be the victor, he would be the second president in U.S. history to hold non-consecutive terms.

To explore the data around this unique election, Reeves pointed to as a consistent source for data. collects outstanding polling data from different sources around the same questions and creates weighted scores. This group measures each poll with consideration to its methodology and quality to attempt to get a more holistic understanding of public opinion. According to the data, the race between Trump and Biden is very close, with the men being consistently within a point of each other throughout the year. Reeves reminded the crowd that on election eve in the 2020 election, Biden was leading the polls by 8 points but only outperformed his rival by 4.4 points when the votes were cast. He also pointed out the importance of the states that Biden won in that election which were lost by Hillary Clinton in 2016. They were the story in that election and are positioned to be important in the upcoming one.

               A part of the disparity between President Biden’s position in 2020 and his position in today’s election, Reeves surmised, is due to his approval. On the day of the presentation, Biden’s disapproval rating is 17.7 points higher than his approval rating. This represents a historic low. In recent history, only George H.W. Busch was close to being as unpopular as President Biden. The professor speculated that if the election were held with the numbers on May 8, Biden would win 48% of the popular vote which, given the Electoral College landscape, would make victory very difficult. Reeves then discussed what he considered why President Biden is so deeply unpopular: the economy.

               While Biden’s first accomplishment listed on is “Lowering the Costs of Families’ Everyday Expenses”, Reeves pointed out that Biden’s messaging is pretty incoherent on the subject of inflation. Looking to survey data from Gallop, Reeves pointed out that when people are asked, ‘What are the biggest challenges for U.S. families?’ the prevailing answer, overwhelmingly, is ‘the high cost of living.’ The only other response that comes even close to that is ‘the high cost of housing.’ Pointing to historical responses, Reeves showed a graphic that detailed the same question asked over time, and up until 2020, people citing cost of living concerns hardly ever hit 10%. “Now”, Reeves said, “it’s the thing.” (Inflation itself has come down since the end of the Covid-19 pandemic, but it’s still above pre-pandemic levels). That caused the presentation to transition to the president’s relationship with the economy.

Professor Reeves pointed out that from 1960 to 2000, a consistent trend was that when people felt better about the economy, they felt better about the president. During the Obama administration that relationship all but vanished, and it remained broken during the Trump administration. While Biden may not appreciate it, he seems to have restored the traditional relationship of economic sentiment and presidential approval. Though curious enough, the same restoration has not been made to consumer sentiment. Through Biden’s administration, when consumer sentiment increases, Biden’s approval rating have tended to decrease. Reeves asked the audience “Why isn’t Biden getting credit?” and presented 4 possibilities to answer.

First, it may be that partisanship in the United States is so strong that the objective economy matters little. Second, the messaging by the campaign could be poor and the media’s attention tends to prefer public events, like Trump’s court appearances, to expounding on economic data (to the distress of some in the room, Reeves reminded us that the average voter isn’t actively checking in on Federal Reserve data). He also suggested, third, that it could just take time for voters to adjust to new economic realities. Fourth, and finally, Reeves suggested that the disconnect between the economy and presidential approval could be a result of uncertainty about the future overwhelming present circumstances.

Reeves concluded that we are still a long way away from the 2024 election, and regardless of how one feels about the current election, we could be seeing the end of a political era. Whether the current era started with Obama, or Trump’s first term, is something Reeves admitted to being uncertain about, but the shadow of Covid-19, the historically old age of the political candidates, Donald Trump’s changes to the Republican party and Trump’s potential victory, all give some certainty that the next four years of politics-- whether Trump or Biden emerge victorious this year--will not be the same as the last four.





When Narratives are Wrong

CFA Forecast Dinner 2024

January 24th 2024

Written by Alec Hubbard, CFA

Every year, one of the cornerstone events to any local CFA society is the annual forecast dinner. These tent-pole events gather a wide variety of local investment professionals to hear about what myths drive the markets and how reality may contrast with those ideas. On January 24th 2024, CFA Society St. Louis held its annual forecast dinner at the Hilton Inn in Frontenac MO. The keynote speaker was Rob Arnott. Arnott is the founder and chairman of Research Affiliates, a subadvisor of PIMCO Investment Management. The lead portfolio manager on 13 strategies, Arnott is well known in the CFA community for his broad investment management and his renowned research on smart beta and value investing. His expertise has lead Arnott to be a familiar name in academic literature, with more than 130 articles in distinguished journals such as the Journal of Portfolio Management, the Harvard Business Review, and the Financial Analyst Journal. Arnott’s forecast was especially unique as he served as CFA Society’s 2020 keynote speaker which allowed many attendees to contrast his comments in the present day to the ones he made before COVID 19 changed the world as we know it.

Rob opened with discussing how we exist in a distinct paradigm shift which he compared to the dawn of the internet. Painting a picture of how anyone in the 90s would be amazed with the potency of the technology we have (and perhaps the more mundane things we use it for), Arnott asserted that we exist in the type of environment where the disruptors of the past are prone to be disrupted themselves through artificial intelligence (AI). Although Markets are conventionally thought of as efficient, Arnott painted a more nuanced picture stating “The good news is that the market is driven by narratives, and if the narratives are wrong there is opportunity for profit”.  

Arnott went on to discuss a large fallacy that has existed in the past and perhaps persist today, the idea that the big winners of today will continue to win in the future. Diving into historical data, Rob showed how the biggest names in the market are consistently changing. For example, the largest 10 stocks in the 1990s have all been surpassed by more modern names and even 4 of the top names from 2020 have lost their footing. That historical context stands in contrast to 2023 where the “Magnificent 7” (Nvidia, Meta Platforms, Apple,, Microsoft, and Alphabet) have grown to command 27.9% of the S&P 500 Index, and have a larger market cap together than the even large national economies like that of China. Arnott stated that deeming these 7 companies more important to the global economy than China and perhaps all of Europe is, at the very least, incredibly bold.

Drawing a line between past and present, Arnott reminded those in attendance that AI is not new. With neural networks dating back to the 1980s, the substantial thing that has changed is that AI is now user friendly. The impact, Arnott suggested, is that jobs won’t be lost to AI directly, but to people who know how to better utilize AI than their peers. A further impact is that, when the impact of AI is realized by the market, the beneficiaries may not be the companies that the market expects.

Transitioning to his academic interests, Arnott discussed value equities. He asserted that value is not dead. He pointed to value stocks being relatively cheap, elaborating on to historical data showing that it is at its cheapest level since 2006. Further exploring the point, he showed data indicating that value stocks were especially cheap when considering the fundamentals of the constituent holdings. Because of these depressed valuations, Arnott was able to use historical data to demonstrate the potential for higher subsequent returns. He also made note of a historical trend of value stocks outperforming during periods of high inflation. This is warranted because high inflation demands a higher discount rate which challenges investor preferences, shifting those preferences from the more speculative future returns of growth stocks towards current income that makes up a larger proportion of value stock returns. This impact on preferences is supercharged because higher inflation rates tend to be more volatile than lower inflation rates causing people to prefer the margin of safety that stronger fundamentals relative to price can provide. With two historical tailwinds for value stocks are in play, Arnott made a compelling case for the consideration of value positions.

Finally, Arnott discussed interesting work he has done in the study of fundamental indexing as opposed to capitalization (cap) weighted indexes that dominate the market. Arnott specified that while he isn’t disinterested in cap weighted indexes, his approach to research and development is asking whether there is something that can lead people to better outcomes. He then declared that he believes the final myth swaying the market is that cap weighted indexes can’t be improved upon. Because the market is dominated by top performers and because the market has a spotty record of identifying top performers in advance, there, in theory, should be room to improve. Arnott closed by sharing work he has done on the RAFI Fundamental Index and its development of the indexing field.  

A special thanks to the 2024 sponsors of the Annual Forecast Dinner. The silver sponsors were PIMCO Investment Management and Janus Henderson Investors. The Bronze Investors were Palmer Square Capital Management, Voya Investment Management, and Allspring Global Investments.



January 4, 2024

By Alec Hubbard, CFA

A part of CFA Institute’s mission is to disseminate knowledge to improve investment professionals’ ability to contribute to robust markets. Every year, a part of CFA Society St. Louis’ effort to contribute towards this goal is bringing the local investment community together with thought leaders from St. Louis Federal Reserve. On January 4 at the Saint Louis Club, CFA Society St. Louis-- in partnership with the Financial Planning Association® of Greater St. Louis and St. Louis Women In Investments Network-- heard from Kathleen Navin on the state of the economy.

Navin is a Senior Business Economist at the Federal Reserve Bank of St. Louis in the division of Supervision. Kathleen’s responsibilities include analyzing and presenting on economic and banking conditions in the United States (and regionally). Prior to her role with the St. Louis Federal Reserve, she held the position of Economics Executive Director in U.S. Economics at S&P Global Market Intelligence where she produced analysis on economic data and forecasts related to the US economic outlook.

Her recap of 2023 highlighted the Federal Reserve’s restrictive stance to monetary policy and 2023’s economic conditions surprising market participants with better than expected performance. Navin pointed out that this positive outcome was largely driven by the consumer who still had excess savings that had built up during the COVID-19 Pandemic.

Transitioning to the present, Navin pointed out that excess savings have been drawn down and the labor market is weakening. Higher interest rates are impacting housing considerably and inflation is continuing to moderate. Economic growth is expected to slow in 2024 with a projected unemployment rate of 4.1% and inflation continuing to move closer to the Federal Reserve’s 2% target. Navin then used data from FRED, a publically available economic data database maintained by the Federal Reserve Bank of St. Louis, to illustrate her ideas and things to watch for. Some points Navin pointed out were:

On the consumer

§  Consumer excess savings has drawn down to $300 billion from $2.2 Trillion at its peak, weakening its potential to support the economy

§  Credit card balances have increased to pre-pandemic levels. As consumers try to maintain their standard of living in the face of inflation, they have taken on more debt.

On Housing

§  Home prices have stayed elevated in spite of higher rates because of a lack of supply which remains at all-time lows (since 2000)

§  New single family home construction has increased, demonstrated by new permits. Multi-Family unit permits are cooling while single family unit permits continue to increase.


On inflation

§  Navin made a note to pay attention to core services PCE inflation which hasn’t moderated to the extent of core goods inflation.

§  Payroll gains have been slowing to 230,000 a month in 2023 from a 600,000 per month high in 2022. Navin made the note that the phenomenon known as The Great Resignation, where people changed employers for substantial salary increases, has largely normalized. Less turnover in the labor market is helping to moderate inflation.

On Rates

§  Long term treasury rates have fallen and retraced increases experienced from July to mid-October.

On Equities

§  The U.S. Dollar has depreciated 4% since October, making exports cheaper and imports more expensive. This resulted in a positive impact on GDP.

On Banking

§  The big story is a decline in bank deposits. This largely happened at regional banks because customers were less confident about their stability.

§  Banks’ willingness to lend tapered, which is something to keep an eye on because bank loans are how interest rates are disseminated on the real economy.

Finally, discussing her projections, Navin predicted a 1.4% GDP representing a moderated number compared to 2023, but one which ultimately should avoid a recession. On inflation Navin showed projections that model it continuing to trend towards its 2% policy target with 2026 being shown as the year it may completely normalize. In terms of rates, Navin described what she called a “removal of policy” wherein 3 rate cuts could happen in 2024, but with the justification of removing restrictive policy as opposed to endorsing exuberance. As always, the Federal Reserve will follow the data to see if the economy starts to reheat or if it will continue trending towards a sustainable outcome.



Dollar Denominated Discussion 

November 1, 2023 

by Alec Hubbard, CFA


Part of the effort of CFA Charterholders is expanding the investment universe of their clients. An often less explored asset class is emerging markets which largely have less coverage than their more developed international counterparts. On November 1st 2023, CFA Society St. Louis supported its member’s education by hosting David Muller, a portfolio manager from Ashmore Group, at the St. Louis Club in Clayton Missouri.

            David has a long tenure consulting around emerging market products in his portfolio manager role and prior roles as director of business development at The Rohatyn Group, and in roles at Morgan Stanley Investment Management, Fisher Francis Trees & Watts, Alecta Investment Management and JP Morgan Investment Management making him a premier speaker on emerging market asset classes.

            Starting his presentation, David pointed out some crucial details about the emerging market investable universe:

·       There are 72 countries in the emerging market bond index and 4 countries in the MSCI EM index

·       84% of the world’s population lives in an emerging market country

·       There will be 17 elections in emerging market countries next year – the most since 2003 making it a big year for potential political change.

·       Most indexes are controlled by JP Morgan who control the indexes in order to profit off of creating swaps.

·       Various emerging market indices cap participation in any one market

·       Emerging market comprises 12-30% of global benchmarks. Their weight increases over time as the markets become more investable.

Muller then went on to show efficient frontier analysis to demonstrate the benefit of diversifying treasuries with emerging market bonds showing a volatility benefit from a 10% to 30% allocation to the EMBI GD Index coupled with U.S. Treasuries. He rose the point that emerging market debt is ahead of the U.S. with respect to the rate cycle. This is because they had to anticipate the U.S. Interest rate increases in order to remain attractive to foreign capital. This provides the opportunity to buy long duration U.S. denominated emerging market debt at a time where their central banks are looking to cut rates.

Beyond USD denominated sovereign bonds, Muller recommended active management/research. Some corporate bonds issue at a spread to sovereign bonds and there is a need to understand how corporations price their bonds relative to sovereigns. Understanding and managing currency risk and FX risk is also something passive investors can find challenging in emerging markets.


Speaking the CFA Language 

Dale Carnegie: Engage & Influence Others Workshop

September 19, 2023

by Alec Hubbard, CFA


A poorly kept secret of the investment industry is that often outcomes can be determined, not exclusively by investment knowledge, but a blend of investment knowledge and on how well one presents. While the pride of the CFA program is the proliferation of investment knowledge, on September 19, CFA Society St. Louis hosted a workshop from Dale Carnegie’s Jacqueline Wilson to provide its members the opportunity to shore up their presentation skills at the Hilton Hotel in Frontenac. Wilson has extensive experience training financial professionals specifically, having done so at Edward Jones for 13 years while building 20 years of experience working as a presentation trainer at Dale Carnegie where she has since transitioned to a full time career.


Beginning the workshop, Jacqueline told the group that if she could give them one thing to take away, it’s that you either present with power and purpose or you present poorly. She cemented her point by citing a Wall Street Journal Survey of 200 executives which showed that 44% of them associated presentations with the word ‘boring’ and 40% of them associated presentations with the word ‘sleepy’ while only 3% of them associated them with the word ‘stimulating.’ Attributing those results to the lack of quality presenters, Wilson drove the point that quality presenters are engaging, authoritative, and connect with their audience by relaying the positive impact of their message and answering for their audience the timeless question, ‘what’s in it for me?’


Jacqueline navigated those in attendance through a series of exercises to support the charter holders with the following objectives: 1) deliver professional presentations with confidence;  2) determine the purpose and structure of presentations;  3) practice techniques for openings and closing; and 4) follow a process to motivate people to action. 


The first series of exercises had the participants answer what their goals were in learning to present better, as well as developing an effective first impression through appearance, intonation, and/or writing style. Amidst more personalized discussions, Wilson encouraged the audience to prepare for presentation using brief notes on interesting things they want to mention as opposed to preparing full write ups or memorizing a presentation word for word. She also coached the group on audience adaptation, challenging the participants to think of their audiences’ knowledge, expertise, experience, biases, needs, wants and goals. Within this context, Jacqueline challenged the participants to think about what we, as presenters: 1) want our audiences to know; 2) want our audiences to do; and most importantly, 3) what we want our audiences to feel, and encouraged group discussions to center the participants’ experience in the workshop within their personal goals.  


The second series of exercises was focused on the structure of a presentation. Wilson described the following presentation structure: 1) Opening; 2) Message/Evidence; 3) closing and sometimes, 4) Q&A. Jacqueline emphasized steps 1 and 3 with the analogy “Presentations are like flying a plane, the potential to crash is at the opening and the closing.” To that end, she provided a list of opening styles for the audience to consider including captivating statements, questions, incidents, stories, humor or an activity. She led the attendees through an exercise to determine how to best open a presentation, as she conducted more group discussions to keep the participants actively learning.

Moving to the message of the presentation, Wilson prompted the workshop participants to think about the why, what, how and the desired result of the message, before transitioning to a discussion on the closing of presentations where she introduced exercises focused on delivering an impactful conclusion. Within these exercises, she put emphasis on the impact of messages when they are congruent, pointing to research that showed visual and vocal ques being more impactful than what was said. In order to leverage this research, Jacqueline coached the participants on making visual impressions and controlling their tone with the goal of making their presentations congruent. Wilson walked the audience through exercises which emphasized a sort of hyperbolic storytelling. This forced the participants to be deliberate with the way they were expressing different ideas and emotions within the presentation, preparing them to be more deliberate in future presentations.   

The final exercise revolved around telling personal stories, incorporating what the audience learned from the various exercises in the workshop. She reinforced the goal of the seminar by having them use the various techniques to convert experiences into beliefs, actions, and ultimately, results. In the experience of the average financial professional, being able to effectively present is important. The CFA Society St. Louis partnership with Dale Carnegie is a great member benefit & was well received by those in attendance.




How private market liquidity has evolved into the modern era

May 17th 2023

Written by Alec Hubbard, CFA

Within the financial services industry, private equity represents one of the more complex investment vehicles that are accessible to investment strategist for their high net worth clients. A key component of that asset class is its illiquidity, but the nature of how professional private equity managers engage that illiquidity has evolved over time. To cover this evolution, on May 17th 2023 CFA Society St. Louis heard from Bob Long, CEO of StepStone Private Wealth, at the St. Louis Club in Clayton Missouri. A premier speaker on private equity, Bob’s entire career can be summarized by his efforts to expand access to private companies. Prior to becoming the CEO of StepStone private wealth, he co-founded Conversus Capital, and prior to that led Bank of America’s strategic capital division.

To begin the discussion on liquidity in private markets, Long reminded the attendees that illiquidity and returns share a fundamental positive relationship. Therefore, even though illiquidity cannot be eliminated entirely by the evolution of private markets that is a good thing because that illiquidity should generate an illiquidity premium to returns. Even given the benefit to the illiquidity premium, Long characterized the expanded access to private markets relative to a historical lack of accessibility as a good thing before elaborating on how he views his firm’s role as an actor in private markets.

Bob framed StepStone as “the most important asset manager you’ve never heard of”. As one of the largest allocators to private markets, StepStone serves a key role for institutions attempting to access private equity, private debt, private real estate, and infrastructure. Within those asset classes, StepStone proactively stays in the business of solving problems for clients, directly, by operating SMAs, co-mingled funds, and in a less direct capacity in advisory services and analytics where they can use their unique technology and access to data in private markets to help inform the processes of other firms. After the introduction to StepStone, Bob went into a detailed discussion on the history of private markets.

            Access to private markets was originally developed via the primary fund. A primary fund is structured as a limited partnership (LP) where the limited partners commit capital to a general partner (GP) who invest those funds over a 5-7 year period in a target company, and then return those commitments with any gains in what is generally stated to be a 3-4 year period after the initial 7 for a standard life of 10 years. In practice, Bob asserted that the historical lifespan is often closer to 15 years. The key takeaway is that these primary funds have a finite lifespan. Within this structure there are several pronounced risks. The first is blind pool risk which exist because you commit assets to a fund and pay fees on those committed assets before investments begin. Second, capital calls are unpredictable which result in a difficulty in getting a client invested, especially without sufficient scale. Finally, a general inconvenience exist wherein the structure of the funds necessitate a K-1 tax form which is issued in October as opposed to the more user friendly 1099 form which is issued in January.

            Following the primary fund, 20 years ago secondary markets debuted. Secondary markets were created so that primary investors could sell to a secondary buyer with the consent of the general partner (GP). Bob pointed out that general partners are more likely to give consent when the secondary buyer is one they view favorably which gives strong secondary managers a network effect. Secondaries started as a vulture market because of dramatic information asymmetry. An important reminder Long articulated was that the same protections against insider trading that exist in public markets to not exist in private markets. Because good secondary buyers proliferated the ability to obtain sound information, the secondary market grew to $22 billion by 2010. Hence, while secondaries started as a vulture market, they evolved to become the first source of consistent liquidity available in private markets. Bob then continued on to the advantages of secondary funds relative to primary funds.

            Secondaries lessen the blind pool risk of primary funds and also have a shorter duration then a primary fund. For many reasons, but primarily because of active portfolio management, many secondary sales happen at a discount which favors the secondary buyer. For reference, Bob shared that 1/3 of the gains StepStone has managed have come from purchasing private assets at a discount while 2/3 of those gains have come from the continued growth of the purchased assets. These advantages for secondaries eventually encouraged the development of GP led secondaries.

Long dubbed GP led secondaries as “Liquidity 2.0” as general parenters were able to create secondary funds themselves to create liquidity for their primary funds, and in an effort to improve blind pool risk themselves. An important strategic ability these funds had was the ability to retain successful companies. Whereas a general partner in the past would have to sell successful companies and lose future returns to start a new fund, they can now sell just a portion of that company to a 3rd party via a strip sale. This also provided for continuation funds where company can be bought by the continuation fund if a general partner thinks it can continue to hit their return target. The added flexibility for general partners played a part in the massive expansion of GP led secondaries through 2017 and 2018, and the market for them has expanded dramatically even after the COVID pandemic. In terms of client experience, Long stated that GP led secondaries tent to mathematically have the look and feel of a co-investment, and allegorized them as betting on a horse after the race has started. Bob concluded that today we have a robust traditional secondary market where quality assets with strong IRRs can be acquired by buyers who operate in those markets like StepStone.

            With the history of primary and secondary funds laid bare, Bob illustrated the evolution of private markets today. In the modern day, a big driver of flows into and out of private investments is the denominator effect, a phenomenon that happens when attempting to rebalance a portfolio of publically traded assets whose valuations are fluid with alternative investments whose values may not immediately reflect current events. Furthermore, buying secondaries isn’t easy. Because the seller needs GP consent there is a lot of work to do and the mechanics of it are different than buying private companies directly. While managers like StepStone are able to navigate these challenges and the expansion and contraction of private company discounts, allowing clients to navigate these challenges more seamlessly has encouraged the next evolution of private markets, the evergreen fund.

            The evergreen fund, not to be mistaken with a liquid alternative investments, is a fund with typically monthly entry, points, quarterly exit points, provides a 1099, as well as a daily or monthly net asset value. As a semi liquid fund, there are compromises made and so most funds provide a maximum of 5% of the fund’s assets that can be withdrawn in a quarter meaning there is no guarantee a client could receive their distribution from the fund in a given quarter. This compromise allows the fund to protect itself from being oversold and maintains what Bob argued was most of the illiquidity premium private markets allow for. The ever-present ability to invest capital and withdraw assets, even if it takes a couple of quarters, makes these vehicles an interesting advancement for individuals and smaller institutions. The structure is able to be held in a retirement account which can add further appeal to one looking to invest in something and allow returns to compound over longer periods. Bob finished by stating he believes this tool allows for an access to premium returns that private markets offer, with more transparency, convenience, and liquidity then was historically possible.

As a Matter of Factor  April 11th 2023

Written by Alec Hubbard, CFA


Diversification is something of a mantra to financial professionals. In the modern era of investing, the number of axis one can diversify across has expanded profoundly. As a result on April 11th 2023, CFA Society St. Louis was benefited by hosting Chris Busch, CFA from First Trust to speak on factor based investing at the Hilton Inn in Frontenac MO. Busch, as a vice president of strategy research and portfolio manager for First Trust’s active style suite of ETFs, was uniquely qualified to discuss using factors to “know what you own”.

He opened by reminding the audience that the best factor an investor has been able to take on historically is the equity risk factor. He then contextualized that comment to the current economic environment, reflecting on the outperformance of technology in the first quarter and the 2 key inputs to performance year to date, interest rates and the earnings environment.

Moving onto factors specifically, Busch defined 6 factors that he uses in his practice: value, momentum, quality, size, low volatility, and dividend yield. Each of these factors have slightly outperformed the market if observing the period between 1988 and today through either enhancing returns, or removing risk from the broader market. What makes the factors valuable is the additional means of diversification they provide. Chris pointed out that in recent times, the market has become more “basketized” in that assets broadly tend to move up or down together. Factors provide another avenue to find qualities about assets which may reduce their correlation with one another.

Assessing factors is not without risk. Busch cautioned that factors move in and out of favor over time, which warrants a multi factor approach. Factors are also difficult to time because 1) they tend to be tied to the business cycle which itself is hard to predict, and 2) even if the business cycle is completely understood, factors can act contrary to expectations. With those reminders Busch went on to briefly cover how the 6 factors he outlined have acted recently.


Chris commented that small caps are cheap from a price to equity multiple standpoint relative to large cap companies. That said, within large cap companies the highest weighted companies in indexes weighted by market capitalization are expensive relative to even the smaller large cap companies. This has created an environment where the S&P equally weighted index is an entire standard deviation below the S&P 500 on the size factor, and provides an opportunity to find companies which have attractive multiples without moving into asset classes which are widely considered more risky.


Of the factors, Chris noted that quality is the most ambiguous. Academically quality tends to refer to a company’s profitability and having a good balance sheet. The result historically is a factor that is never the top performing but is never worst performing either. Busch speculated that the number of “zombie companies”, i.e. companies that aren’t profitable, has increased. As seen in the recent banking turmoil, a market that culls unprofitable companies from its ranks provides an environment that can make the quality factor attractive. 


Busch noted that growth has become more attractive than it was 2 years ago. He elaborated that while last year was value’s year, growth has since resumed its recent historical trend of outperformance. Chris explained that value tends to be a more innocuous factor, but it has big riffs which can warrant its inclusion in a portfolio. He highlighted a key challenge in value investing is the consistent reconstitution of value indexes. This causes the inclusion of names which are less intuitive in the value universe like META while traditionally value names like XOM and CVX have counterintuitively moved to growth due to the prior year’s broad rally in energy names. Therefore, the key to value investing is ensuring that you are actually getting value in the investments selected.

Low Volatility

Chis noted that he likes this factor as it gives investors a means to stay in equities, but take risk off the table. The factor provides investors a means to get a more defensive profile without being tethered to traditionally defensive sectors like staples and utilities exclusively. He elaborated that it can be a good factor to mix with others because the names this factor captures tend to be bond proxies. His concluded that an interest rate cut could benefit this factor.


Busch defined momentum as a factor with a lot of divergence. Momentum is more profound then broader growth because it shifts more regularly. Currently, energy holds a high weight in momentum indexes because of energy’s rally in 2022, but it hasn’t maintained the same level of outperformance as last year. Consequently, an important consideration when investing in momentum is rebalancing frequency.

Dividend Yield

Chris commented that he finds the dividend factor interesting. He advocates for companies who grow their dividends over companies that have a high current yield as the dividend aristocrat index has proved more than competitive with the growth index. He pointed out that the dividend factor can struggle in markets dominated by FANG stocks which in recent years has created a narrow market, but expressed that he liked the factor moving forward.

In conclusion, Chris noted that factors should be used like a toolbox so that investment professionals aren’t limited to single stock risks and sector specific risks when exploring how to diversify risk in a well-structured portfolio. Furthermore, he emphasized that factors work better as an investment strategy when fundamentals matter.



The 2022-2023 CFA Society St. Louis Research Challenge Finals

February 17, 2023

Submitted by Alec Hubbard, CFA

To the layman’s view, the CFA Institute Research Challenge appears to be the most quantitative book report ever written paired with a professional oral presentation. Lying beneath the surface is a rigorous research exercise that combines the talent of students, professors, and professional mentors. On February 17 at The Ritz Carlton in Clayton, five teams took on the CFA Society of St. Louis Research Challenge and presented their research to high-profile judges from across St. Louis’ community of CFA charter holders.


Each team was charged to present on the target company, St. Louis-based food technology firm Benson Hill, for 10 minutes followed by a 10 minute question and answer session. This presentation leveraged their research and their completed report to persuade the judges to their buy, sell, or hold rating on the company. The final score to determine the victor was built with the following components: 20% on financial analysis; 20% on valuation; 10% on ESG evaluation; 20% on the presentation itself; 20% on the following Q&A session; 5% on the team’s involvement and 5% on the quality of the materials used.


Like any good competition, the Research Challenge had real stakes, with the First Place team receiving an invitation to the next level of competition and each of its members receiving a $1,000 scholarship for the CFA program. Each member of the Second Place team received a $500 scholarship for the CFA program.


Opening the event, Joe Lachky, Co-Chair of the CFA Society St. Louis Research Challenge Committee, introduced the judges. The panel was comprised of Mark Keller, Confluence Investment Management’s CIO; Nick Tompras, the CEO and CIO of Alpine Capital Management; Linda Bannister, Edward Jones’ Director of Securities Research; and Robin Diedrich, a Senior Equity Research Director at Edward Jones. The expertise of the panel demanded a high level of polish and contributed to a thought-provoking Q&A discussion for each team. With the competitors aware of the judges’ specific backgrounds, the presentations began.


Team A from St. Louis University, which consisted of Mason Kimbarovsky, Patrick Gosser, and Josh Parney, was the first to present. Their presentation attempted to reconcile Benson Hill’s potential for a 50% upside, suggested by a high growth rate, with rocky financials and volatile cash flows. Comparing the company to Benson Hill’s more developed peers in their industry, Team A provided cause for prudence when approaching the stock, considering lagging key ratios like the weighted average cost of capital. Team A also pointed out unique ESG risk including the high compensation package for Benson Hill’s executives relative to their small size and inconsistent cash flows. The judges asked about these challenges and the nuances of how executives were compensated and how they went about valuing products without profitability.


Team B from Washington University consisted of Samuel Berger, Teja Sunkari, Sam Guo, Lillian Zhao, and Ulrica Wu. Team B asserted a Buy rating with a 50% upside to the stock’s current price. Their bullish recommendation leveraged macro-level demographic trends, an increasing demand for the product pipeline Benson Hill develops, and micro capabilities that observed the capacity for Benson Hill’s unique technology. They assigned a $3.55 share price weighting their thesis and projected likelihood for scenarios including a potential merger to outright business failure and $3.9 using a profit to gross profit multiple analysis. The judges challenged the team on a royalty scenario they presented, with a low probability and specifics on their merger scenario amidst other specifics.


Team E from Southern Illinois University in Carbondale, which consisted of Katherine Held, Ethan Keller, Ivan Vargus, Yunjia Zhu and Matthew Carrazoo, recommended a Sell rating with a target price of zero. Their extremely bearish thesis hinged on Benson Hill’s Management having no credible plan to achieve profitability in the face of an already mature industry. Their analysis projected the company’s cash flow running out as soon as 2029. Using Benson Hill’s debt maturity schedule and discussing the more challenging environment for debt financing moving forward, Team E saw the company moving towards bankruptcy within 5 years. To compound their bearish case, they pointed out the lack of available ESG data from the company. The judges asked if they had considered any scenarios like a merger and if the technology Benson Hill develops has no intrinsic value. They also asked about areas where team E’s cashflow projections varied from Benson Hill’s management.


Next, Team F from St. Louis University consisted of Stephen Rashford, Vrisha Jagdish, and Samad Arif, who presented a buy rating with a price target of $2.36 which implies a 113.6% upside. Team F leveraged a discounted cash flow model considering the weighted average cost of capital throughout Benson Hill’s potential stages of growth. They defended management’s projections with regard to cash flow and asserted that management has managed risk well with respect to public perspective, cash burn, future financial stability and their limited operating history. The judges asked about details to the detailed cash flow model, whether or not certain projected risk could be quantified, and how their risk management encouraged them with respect to management’s capabilities.


Finally, Team G from Washington University, which included Yeetang Kwok, Eric Mafla-Hernar, Ethan Bort, Jacob Daniel, and Ravi Dantuluri, presented an “avoid buy” rating with a target price of $2.44. They pointed out that relative to the international environment, Benson Hill’s approach to products is costly, relative to its overseas peers. In addition, the lack of ESG ratings and data challenges the thesis of Benson Hill as an ESG play, even while admitting some of the company’s processes had merit with respect to ESG. While showing metrics that could be used to justify a more bullish case, the team projected that a challenging macroeconomic environment could influence liquidity to Benson Hill’s detriment. The team used two methods, one based on multiples and one based on beta, to arrive at their price conclusion. The judges asked how they assigned weight to each of their valuation methods relative to one another and the specifics of their valuation models.


After the judges deliberated, the competition came to a close finish. Team B from Washington University scored First Place by winning over the judges with an outstanding presentation and the 2nd highest score on the written exam. Congratulations to Samuel Berger, Teja Sunkari, Sam Guo, Lillian Zhao and Ulrica Wu!


Team F from St. Louis University was awarded 2nd Place with the highest score on the written portion of the exam. Congratulations to Stephen Rashford, Vrisha Jagdish and Samad Arif!

*Benson Hill’s price as of writing was $2.30 per share. **The investment theses, price targets, and other covered points in this article were developed by competitors for the CFA Institute Research Challenge. They are not investment advice and the soundness or accuracy of anything discussed in this piece is not assured.

The Tax Advantaged Ride of a PPLI

November 8th 2022

Written by Alec Hubbard, CFA

            Within investment management, and alternative investments specifically, finding strategies which can make effective returns is of paramount importance. That said, for many clients the tax efficiency of their investment strategies and vehicles is nearly as important. On November 8th 2022, CFA Society St. Louis heard from Zach Specht from Winged Keel Group and Ross Van Der Linden from Golub Capital on using private placement life insurance (PPLI) policies as a tax efficient means to access alternative investment strategies at the St. Louis Club.

            Zach kicked off the presentation introducing private placement life insurance policies. PPLIs are a form of variable life insurance. Whereas a traditional life insurance policy wants to maximize the death benefit while minimizing premiums, PPLIs, instead encourage a lower death benefit and allow premium dollars to be invested into 3rd party managed investments. Within the policy, investment returns can grow tax deferred making them an interesting vehicle for high net worth clients. Zach cited dynastic trusts as an example of an entity that could take advantage of PPLIs because of a potentially tax free disbursement in the event of the death of the grantor. In addition, because you can withdraw the principal without a tax penalty and take a loan against the policy for 80% of its value, Specht stated that you don't see a lot of these policies surrendered.

            He then presented hypothetical performance figures of investments within a PPLI relative to a hypothetical taxable investment. While the impact of PPLI fees/insurance cost were 52bp, the tax drag of comparable taxable investments ranged between 2.83% and 4.57% (assuming 75% of the tax impact was short term capital gains and 25% long term capital gains). Specht made the case with these figures that the advantage of insurance cost relative to the tax consequences of taxable vehicles could be vast.

            Moving past the quantitative slide, Specht stated the minimum investment is a $1mm premium commitment spread between 3 or 4 deposits. Within the policy, 3rd party investment managers also have minimums meaning a typical commitment is $5mm for the sake of accessing a diversified set of managers within the policy.

            A key constraint to PPLIs is that, in order for investment managers to be made available for the policies' use, investment managers must have an insurance dedicated fund (IDF) to prevent the comingling of taxable dollars and insurance dollars. This limits their investable universe. A second key constraint is that while clients can choose which investment managers and 3rd party managed strategies are used within the PPLI, clients cannot influence specific investment selection within those 3rd party strategies. Due diligence on the 3rd party managers is performed by the insurance providers. With the potential benefits and constraints to PPLIs laid out, Ross then described Golub Capital's strategy and how it fit in the broader picture of PPLIs.

            Golub Capital is a private credit manager which provides first lean senior secured loans to private equity companies backed by private equity firms. Ross explained that while traditional banks provided most debt financing to private equity 30 years ago, they have largely decreased the lending they do within the United States in that space. This environment has allowed non-bank lenders to fill the gap. This provides an interesting investment opportunity for Golub especially in this unique interest rate environment where Ross cited the rates they are able to charge are up to 11-13% from historical levels of 7-8%. In addition Der Linden cited improving debt covenants as a reason for a more attractive investing environment today. He articulated that having a private equity partner with the companies Golub works with is important because it provides an entity which can provide capital injections to the company if needed, and affords the company a more objective assessments of management performance relative to something like a family owned business where management can be hard to replace.

            Because of the interest payments an investor receives in an investment like Golub, using it within a PPLI could be an effective ways to enhance the investor experience via a more tax efficient vehicle. To that end, Ross concluded that Golub can be a good partner to high net worth families.

To register for the CFA Society St. Louis popular monthly speakers, contact CFA at 314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. 


CFA Research Challenge Kick-Off

October 26th 2022

Written by Alec Hubbard, CFA

   The CFA Institute's Research Challenge represents a great opportunity for students to step into the shoes of a sell side analyst and spend a few months in their shoes. This year's competition kicked off the first 20 days of preliminary research at the Ritz Carlton Hotel in Clayton Missouri where 7 teams from Saint Louis University, Southern University of Illinois Carbondale, Washington University, Maryville University and Lindenwood University met Matt Crisp, the CEO of this year's subject company Benson Hill, and Ruben Mella, Benson Hill's head of investor relations.

                Matt Crisp led the presentation. He opened encouraging the students with his own experiences stating that his biggest success in school was lobbying his school's endowment board to allow a student managed investment portfolio. He told the students that in participating in the research challenge, they are creating a similar experience. He then went on to describe Benson Hills's history and business model.

                Matt described Benson Hill as a St. Louis based food technology company that was co-founded 10 years ago with the Donald Danforth Science Center, the largest independent plant research science center in the country. The company has a wide range of employees representing blue collar and white collar positions alike including engineers, mathematicians, data and plant scientist, sensory experts and experts in ergonomics and plant breeding. The average salaries well into the 6 figures are due to the high expertise of staff.

                The value proposition of Benson Hill revolves around a story of technological progress. In the status quo, Crisp described our food system as producing cheap calories wherein food production has become efficient because it was structured with a set of silos each incentivized by scale. Examples of these silos are 1) breeders/seed farmers whom are incentivized to produce as much as possible with as few inputs as possible, 2) ingredient companies who are incentivized to be as efficient as possible so they can sell to 3) consumer packaging companies to distribute to the end consumer. The incentive around costs motivates the addition of additives and flavors to create products customers find attractive and motivates a decrease in nutritional content because breeding for yield prioritizes carbohydrates, which are cheaper for photosynthesis to produce than proteins. Ultimately this sends a less than optimal product to the ingredient phases of production.

                To solve for this, Benson Hill seeks to take feedback from the end consumer and link that feedback to seed design with the end goal of building something better for the consumer seamlessly. They hope to leverage innovation to do this while pulling cost from the current systems that produce food. Because technology like AI, sensory systems, CRISPR, and other developments in the space allow humanity to understand and work with the genome better than ever before, Crisp argued Benson Hill's ambition to leverage these tools to accomplish its aims is a strong proposition.

                Matt then went on to describe the market opportunity. In the status quo, plant based markets are capturing a premium seen in examples like beyond meat and alternative dairy. The demand for protein is increasing globally, and the impact on inflation on food has been pronounced. Part of the opportunity has an ESG element to it as well. Because breeding for yield decreased proteins and increases carbohydrates, carbon intensive steps in the food production process must be taken to increase the percentage of proteins in an end products. These are steps which Benson Hill can remove eliminating a negative externality as well as costs from the food production process.

                In the face of this, Matt described Benson Hill's strategy as 3 pronged 1) Genetics data which he contextualized to say data can help develop plants 2) Technology which he contextualized saying that technology can help develop infrastructure and capabilities to produce faster stronger and cheaper than existing methods, and 3) leveraging multiple markets which he contextualized by reminding the audience that knowing how to sell a mouse trap is important right alongside developing one.

                He then went on to describe Benson Hill's technology platform. Its capabilities include, amidst others, predicting outcomes of plant breeding in advance of physical testing and using crop accelerator facilities to force reproduction to speed up the R&D process. The end result is selling texturized flour to use in food production, specialty oils, and aquaculture (livestock food).

Finally Matt answered several student questions about the company's competitors, international strategy, and considerations of the current macroeconomic environment. He concluded that an important consideration for the students would be the macroeconomic environment and what is responsible from a multiple standpoint when attempting a valuation, and encouraged the students to leverage Benson Hill's investor relation's site's videos and archived presentations, including the one he spoke on which can be found at the following URL. (

                From this point, students will have until November 17th to compile a list of any additional questions motivated by their own preliminary research for Benson Hill's management who will be made available to students at least once before the competition closes. December 17th is the due date for the research presentation's first draft. A final draft will be due in January and the final competition presentations will be delivered on February 17th for prizes including notoriety, vouchers for the CFA program, and advancements to higher levels of competition.

To register for the CFA Society St. Louis popular monthly speakers, contact CFA at 314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. 

CFA Society St. Louis October 2022 Career Fair

October 13, 2022

Written by Alec Hubbard, CFA

After the resounding success of the previous career fair in March, CFA Society St. Louis hosted a second career fair for students and recent graduates this year at the St. Louis Club. Amidst the opportunities to network and explore opportunities with local employers, including Edward Jones, NISA investment Advisors, Confluence Investment Management, Asset Consulting Group and Wells Fargo, participants were able to hear about career possibilities for professionals interested in the CFA charter.

Kathleen McGrath, CFA – Wells Fargo

The first speaker was CFA Society St. Louis' president Kathleen McGrath CFA. Kathleen outlined the basics of the charter for interested students. Short for "chartered financial analyst", the CFA charter involves completing a college degree, 3 exams, and 4 years of work experience. She emphasized that the charter is the gold standard within the financial services industry and serves as a toolbox to access a lot of different opportunities in the industry. The curriculum involves financial analysis, performance assessment, portfolio management, quantitative methods, economics, ethics and other topics pertinent to the industry, and McGrath highlighted that even the seemingly odd topics on the exam can become surprisingly relevant as one's career progresses within financial services. To demonstrate, she spoke on her own career journey.

McGrath started her career covering medical device companies specifically which, over a decade in that role, culminated into her becoming an expert in medical technology company valuations. When Kathleen wanted to make a change, the education provided by the CFA charter's curriculum allowed her to make the leap to investment analysis beyond medical device specific companies. Due to the breadth of her knowledge base enhanced by the education behind the CFA charter, she then transitioned to join manager research at Asset Consulting Group.

Kathleen then described her roles with Asset Consulting Group and her current role with Wells Fargo as manager research positions. She elaborated. Manager research is a career field which involves picking investments for clients to use within their asset allocations. She described it as "sitting on the other side of the table" wherein instead of evaluating individual companies as investments, she now evaluates portfolio manager's ability to effectively manage investments. She described the CFA as an important factor to make a large change in career as it proved her abilities in the industry in combination with her more focused experience. Ultimately, she concluded that the CFA charter was vital in supporting her ability to navigate the industry, and that the discipline required to obtain a charter would carry any professional in the financial services industry far.

Aaron Goekner, CFA – Semper Augustus Investments Group LLC

                The next speaker was CFA Society St. Louis' Vice President Aaron Goekner CFA who emphasized that he felt lucky to have obtained his CFA charter early in his career. He encouraged students to 1) look into the CFA charter as it proves one's knowledge and discipline to prospective employers, and 2) student memberships within CFA society St. Louis as the membership allows one to participate in all events and networking opportunities the society offers.

He then described his role within Semper Augustus Investments Group where he evaluates the merit of individual stocks within Semper Augustus, which is organized as an RIA as opposed to being organized in a mutual fund structure. As a member of their investment team, Aaron has to keep up with each company his strategy covers as well as generate new investment ideas. All portfolios at Semper Augustus are invested in a concentrated value strategy with relatively low turnover. Specifically, this process involves keeping up with the news on businesses they own, setting a target sales price, and understanding what impacts the businesses they own or consider owning. He emphasized that his process is to look at stocks as a long term business owner as opposed to someone renting a stock and concluded that he enjoys his work as it allows him to explore wildly different businesses.

Dr. Nong Lin, CFA – Commerce Trust Company

                Relative to Aaron's process of fundamental analysis, Dr. Lin contrasted his own process as a quantitative analyst. As a quantitative analyst, Nong wants to know factors in the market that capture stock returns and build a model that projects the future returns of those positions. He can look at the S&P universe or other universes, but the portfolios he co-manages are mutual funds that cover large cap value equities, large cap growth equities, and mid cap growth equities. In addition he has environmental focus strategies to create a more environmentally friendly portfolios considering certain values in the large cap growth and large cap value universes.

Influenced by Dr. Lin's expertise, each fund does well according to Morningstar rankings. Elaborating into his process Nong described his starting point as looking into an investment universe and specifically industry or academic publications about which factors were strong predictors of investment returns. From that starting point, Nong test the factors himself to form an opinion on the validity of that academic or industry research. Then, using a model he builds within the context of his research, he ranks stocks by future predicted returns and builds a portfolio around them.

For Dr. Lin, his day-to-day involves reading news and academic papers and a lot of programming to determine the application of the publications he digests. For a quantitative analyst, rolling up one's sleeves and verifying the truth needs a lot of programming expertise to back test and understand if a new factor can better understand and predict returns.

Dr. Lin's application of the charter was also unique to his background. When he got a PHD in mathematics, the CFA program became a good way to transition his raw mathematic abilities into the investment industry. To that end he said that if you need to switch careers or better apply your major to the financial services industry the CFA charter is a good way to get people to believe in you and open your horizons.

He concluded that if one is interested in becoming a quantitative analyst one needs to 1) like numbers 2) have mathematic and statistics knowledge 3) needs programming skills in a software like SPSS, Python, R, and Excel, and 4) an analytical mind that evaluates topics without emotion in an unbiased way. He also hinted that AI and machine learning are very topical areas in the industry today.

Kevin Moore, CFA – Asset Consulting Group

Kevin offered a slightly different angle on the investment industry as he performs research for entities with long term to perpetual time horizons like endowments, insurance companies, family offices, and the like. His work involves leveraging the financial planning team, performance team, and research team to marry the risk and return objectives of the entities he serves with investments, investment managers, and a variety of strategies which can help meet or exceed their long term goals. He described Asset Consulting group as a company that likes to maintain talent and outlined his own career at the firm from intern, to manager research, to his current role as a portfolio manager on the pension side of the business.

Patrick Fearon-Hernandez, CFA – Confluence Investment Management

Patrick Fearon described his work with Confluence Investment Management in Webster Groves MO, a 100% employee owned RIA with about 45 employees. Patrick is Confluence's market strategist transitioning to take over for Confluence's chief market strategist Bill O'Grady. His role involves taking a top down look at the global "bit picture" with respect to the current investing environment. His role involves closely following geopolitical global economics, technology changes, economic developments and financial developments.

Patrick spoke to his own unique background. He started with the CIA where he was an analyst focused on Soviet defense economics. He described his role at the CIA as answering questions like" is more defense spending good/bad for the economy and what are the impacts of it on the military effort". When the cold war ended he got his MBA at Arizona City University with a focus on investments, but used the CFA charter to supercharge his emphasis in the investment industry. He called those two efforts a perfect way to consolidate what he was learning to get in depth in investments.

Patrick mentioned that Confluence was actively looking for another geopolitical analyst. He elaborated that someone with a background in foreign languages, international relations, global economics, and history who can write quickly could make an ideal candidate.

Rusty Froth, CFA – Nisa Investment Advisors

Rusty Groth CFA opened speaking to his own background. He began his career after receiving an MBA at the University of Missouri when his employer, Nisa Investment Advisors, had him get the CFA charter. He said the CFA taught him a lot of lessons and concepts that have held up through his 15 years in the industry.

Transitioning to speak about his employer, Groyh described Nisa as a large bond manager with 350 employees and $450 billion in assets under management. Most assets Nisa holds are physical bonds, and all of the assets are institutional. Unlike a bond strategy like Pimco, where the mandate is the total return of the assets, the clients Nisa serves employ a technique the CFA curriculum teaches called Asset-Liability Management, where bonds sensitivity to interest rate changes is matches to a client's liabilities (like a loan to someone else) sensitivity to interest rate changes. Along the way they make small alpha generating trades to cover their fees. That process means even in an environment seeing sharp interest rate increases like today's Nisa's client's portfolios can accomplish their objective in the context of their liabilities.

Nisa is the largest domestic credit manager in the world because it has $70billion in credit for sale every day (for the right price of course). The size of their clients means that this is all accomplished with just around 250 clients. Given the number of employees that affords a small team to each client. That personalization has earned them the reputation of being a good "go-to" when a large entity is looking for a custom solution to a problem.


Finally Kathleen returned to conclude the session offering some insight. Whether one should choose a CFA or an MBA she speculated that there was not an objectively right answer and that it depends. She reminded potential candidates that many employers in the financial services industry will pay for the CFA program. In addition the local CFA society has scholarships available (on this very website!). She also announced that interested students could participate in the annual research challenge next year wherein teams work with a faculty member and a CFA Society St. Louis Member to learn how to build a financial model and analyze a company. 


How to Not Build Skynet

 June 15, 2022

Written by Alec Hubbard CFA

            Technology's rapid acceleration is an indisputable fact in financial services and every other industry. Yet, how do we make sure the outcomes of technological proliferation are the ones we truly want? To speak to difficult challenges like this, CFA society St. Louis heard from Dan Conner & Yinka Faleti of Ascend Venture Capital at the St. Louis Club.

Dan founded Ascend out of a relentless passion for innovation and entrepreneurship. As an investor in big ideas, Dan has cultivated a firm that enables the future states of industries. He specializes in new marketplaces and science that pushes the boundaries between fiction and reality. Dan is a recovering engineer from Yale University and holds master's in business and advanced renewable technologies from WashU.

His Co-Speaker, Yinka, joined Ascend out of a passion for ethical impact and social change. Since immigrating to the U.S. at age seven, Yinka's unbridled entrepreneurial spirit was borne from an inspiring journey through poverty, service, and hard-won achievement. Yinka's path at Ascend started after a captivating campaign as a former candidate for Missouri Secretary of State, Executive Director of Forward Through Ferguson, Senior Vice President of United Way of Greater St. Louis, prosecutor at the St. Louis Circuit Attorney's Office, and litigation attorney at Bryan Cave Leighton Paisner. Prior, as an officer in the United States Army, he attained the rank of Captain after deploying in tank units on two tours to Kuwait. Yinka earned his undergraduate degree and officer commission from the U.S. Military Academy at West Point, and holds a law degree from WashU School of Law.

Dan started the presentation by reminding the audience just how prolific technology has become. From the telecommunication industry's transition to 5G, advanced batteries, satellites and solar panel development to cloud computing and artificial intelligence (AI), we are quickly approaching a world in which every successful company, in some form or another, must be a data company. He positioned his firm's insight into these themes as uniquely valuable by articulating that venture capital, now as in the past, is investing in many of the bolder innovations. He argued we could use venture capital as a leading indicator in this regard. Fintech companies alone have received $134 billion in funding from venture capital which represents a year-over-year growth of 177%. That astounding growth is just one example of how these innovation are rapidly garnering attention. The consequence? Dan described the job landscape as quickly changing as computers become more capable of sentient analysis, algorithmic trading, stock price underwriting, and risk management.  

This change raises precisely the ethical questions Ascend has spent time exploring. Yinka stepped in to raise some of these questions. He started with an analogy. What if a super intelligent AI (he named Sophie) were put at the helm of a venture capital fund with $100 billion in assets? In theory, Sophie could analyze every startup company in an instant, and optimize company selection beyond any human's due diligence capability. It would have a wider investable universe than any human managed shop and better security selection within that universe which would be a powerful advent in the Venture capital world. Yinka questioned, from there, what is to stop Sophie from overgrowing its boundaries? From its original universe of startups what could stop it from looking upstream? Why wouldn't it find problems and create startups of its own to solve them led by manager teams vetted more thoroughly than the likes of what we've seen? Why would it not acquire media companies to drive its investments via discourse? Why not even invest strategically in political campaigns to impact public policy? Ultimately, the point is that we will have to answer these questions before such raw computing power is widely disseminated through society to make sure the outcomes we want, as financial professionals and members of said society, are the outcomes that come to pass. 

Yinka drew parallels to the era of Henry Ford and the dawn of the Model T. At the time, Yinka described farriers as being in one of two camps. EITHER they were fearful or they anticipated participating in the development of the automobile. The most productive course of action as today's "farriers" is cautionary participation. Caution, Yinka pointed out, is widespread about the future of technology with 27% of Americans believing their job will be eliminated due to automation. That number goes up to 37% when the polled sample was between 20 and 30. Professional estimates suggest 30% of labor could be replaced by automation by 2030. Even jobs previously considered prestigious could fall victim to this change as an artificial CEO could improve on their human counterparts with an ability to be multiple places at once, an ability to consider all relevant information without bias, and increase diversity.

AI's second challenge could hamper some of those perceived benefits. At the time of writing, AI are developed predominately by men who live in wealthy countries putting their programming in stark contrast to the 70% of the global population who don't live in a developed country. A recent example was an Amazon AI which had to be shut down because its algorithm led it to pick male candidates over comparable women 60% of the time.

Dan stepped in to conclude the presentation asking the crowd if we wanted there to be a super intelligent AI. As financial professionals, should we bar the door to their development, it could implicate us if the AI can make better investment decisions. Should AI strive for the benefit of individual firms or the greater human good? Should we, in our duty to prioritize clients, desire AI that strives to increase the wealth of everyone on the planet over profit maximizing ends? Ultimately, Dan and Yinka argued that humans need to be in the loop for the purposes of verification, validation, and control. As AI and technological proliferation become more inevitable, human's need to think about and make their opinions known on these crucial questions. 


Breakfast Approved for Television

April 27, 2022

Written by Alec Hubbard CFA

Hightower wealth advisors has a simple pitch, "We help you: make a plan, make an investment, and make a difference". Barbara Archer, a partner at Hightower, introduced Hightower's Chief Investment Strategist and CNBC contributor, Stephanie Link, who spoke for a breakfast at the St. Louis Club for a crowd of around 60 pulled from CFA Society St. Louis' members, members of FPA, and STLWIN members looking for a deeper dive on the investment thought that facilitates Hightower's thesis.

A prestigious speaker, Stephanie Link has a rich background of 30 years managing money in high profile roles including director of research for prudential, managing $170 billion at Nuveen while managing a large cap strategy there and the CIO and Co-PM of Jim Kramer's charitable trust. Her insight as a CNBC contributor is well revered which made her presentation on the economy, markets and where she sees opportunity in the markets, a highly anticipated one.

                Stephanie led with comments on the economy. Markets have been anything but simple this year. As of the date of writing, the S&P is down more than 12% and the NASDAQ is down more than 20%. People are uncertain of where we are in the business cycle and a lot of talk has proliferated around the possibility of recession. Russian aggression, inflation, new China lockdowns, and a U.S. Federal reserve behind the proverbial 8 ball have supercharged anxiety in recent times, but Link took the time to remind us that the market always climbs a wall of worry and worry itself is an important reminder that investors should never be complacent. She was generally constructive that, even while Fed governors speculate at various amounts of rate hikes, we will find closure on the rising rate issue. In addition, supply chain recovery should help with inflation even if a precise timeframe is unknown. Another important reminder Stephanie provided is that last year's government stimulus was 60% of GDP which eclipsed even the stimulus from 2008 which amounted to a mere 5% of GDP meaning that even while we have not seen the last of its lagging impact, this year was expected to be weaker than last.

Where Link expressed further confidence was the US consumer. 70& of GDP is constructed by consumer spending, and consumers have an abundance of job opportunities (11.2 million job openings where typically 5 million is considered normal) combined with demand for labor resulting in higher pay. While the consumer is pinched by inflation, and in certain circumstances higher interest rates, other market observations support constructive conclusions. With earnings season in full effect, and consequently an easy to access flow of current information, there is a lot to draw from. Constructive measures Stephanie drew from include the airlines revising guidance to reflect all time high revenues, industry comments on recovering travel and people generally wanting to get out of the house in the post pandemic world. (Note: Stephanie does not own airlines and that observation was not a recommendation for airlines). In addition, companies like Cosco and Target can't keep products in stock and companies like GM can't access materials to produce to consumer demand. These support 2 conclusions Link proposed: 1) supply chain recovery should improve business outcomes, and 2) consumers with a reopened economy will likely transition their spending from goods to services and experiences which should bode well for the economy. 

Elaborating further on inflation, Stephanie commented that while some commodities can be "transitory", she generally takes issue with the word because of supply problems (in oil specifically), and because areas like wages and rents are likely to be sticky contrary to what the term implies. Subsequently, the Fed's increasing interest rates may not be able to help unless they do so aggressively enough to prompt a recession. Inflation, Link pointed out, is a novel concept for a lot of the industry as many people managing money today have not experienced an inflation and tightening cycle like this one. Furthermore, the Fed's track record for engineering a desirable soft landing is only about 10%. That has amounted to an environment where earnings multiples are tightening even while earnings themselves are high.

Moving to implementation, Stephanie had a lot of actionable input. First, she argued technology companies are over-owned due to the success of the strategy in the last 5-7 years. She asserted that technology and communication services are currently stock picker's environments with some companies performing for investors and others not. While she concluded it is is likely early to overweight technology now, looking for tech firms with strong free cash flow should be an aspiration should value's recent lead over growth revert. Link also suggested owning commodity exposed companies in energy and industrials culminating to a balanced approach between sectors.

On fixed income Stephanie asserted that she believes the 60/40 portfolio is dead, and of the 40% previously prescribed to fixed income half of it should probably be positioned relatively short on duration, and the other 20% should be reserved for income oriented alternative investments, preferred and bond-like equity sectors (REITs, Utilities).

On domestic vs. international, Link argued that China's ability to appropriate investments outweighs business fundamentals in a large emerging market player. She also argued Europe's increasing natural gas costs paired with their reliance on natural gas as an energy source makes it susceptible to recession. Those concerns, combined with a less friendly regulatory environment abroad, lack of transparency in international firms, and the ability to access international consumers through domestic companies, were the backbone of her arguments for a heavy domestic overweight in portfolios.

Link expressed conviction in financials as well. She stated she is overweight the sector and that 4 of the 5 names she owns are in banks. She asserted her strategy in financials involves looking for special situations, citing a bank with a new management team and cost cutting opportunities and a payment processing company that has played well with the increasing demand for services. She also cited insurance companies, along with banks, as a potential beneficiary to a rising rate environment. 

After answering other questions, Stephanie concluded with some sound advice. As a TV personality, she reminded us to turn off the TV and divorce ourselves from emotion, and while she is positive on the economy at large she reminded us that hope is not an investment thesis. Stephanie Link recommended being data dependent and balanced this year as a closing remark.


Mighty Things from Small Cap Beginnings Grow

February 16, 2022

Written by Alec Hubbard, CFA

Before the Russell 2000 was the face of the small cap universe, Royce Investment Partners already had an established shop specializing in the research and investment of Small Cap Stocks. CFA Society St. Louis had a lunch at the St. Louis Club hearing from two speakers from Royce's organization on February 16th. First, Steve Clarke, a local member and Royce's head of distribution, and second Steve Lipper who led the presentation. "The good thing about being a specialist in a boutique asset class is you can share things with people thy don't know" Lipper pronounced, and living up to that claim, Lipper delivered a compelling and thought inducing presentation on the small cap stock universe.

The presentation started with Steve pointing out that more homogeneity exist in the small cap asset class than is immediately apparent, and supported that claim laying out some illuminating metrics to frame our conversation. The first metric he presented on was the preverbal elephant in the market environment's room, inflation. In regards to inflation, Steve pointed out that small cap equity is the only major asset class to outperform inflation in every decade since the 1930s. Furthermore, Lipper shed some light on other useful metrics specific to the small cap asset class. An oversimplification that happens in the status quo, he pointed out, is the Price to Equity ratio vs its historic norm. He warranted this simplification as counterproductive because 1) it ignored the interest rate levels over the last 10 years and 2) it ignored free cash flow for earnings after taxes. He proceeded to make the argument that if you think multiples will be flat to declining due to a hawkish Federal Reserve, you want to be aware of valuations (measures by which small cap positions sit at a near 20 year low), as if valuation compression becomes a concern, being in a lower multiple asset class is a logical strategic decision. He also shared data around the risk premium of small caps showing the asset class as persistent even while volatile.

Additionally, Steve detailed a big distinction between small cap value and small cap growth. In 5% of calendar years, the spread between the performance in small cap growth and small cap value was greater than 500bps and in 47% of calendar years, the spread was more than 1000bps. As a consequence of that and the unique headwinds and tailwinds of each, Steve argued that small cap value equities and small cap growth equities should be thought about as distinct asset classes more so than two subsets of the same asset classes. As a demonstrated impact of that delineation, Lipper showed Nominal GDP growth as a predictor of performance between the two. In periods where nominal GPD was greater than 5%, value outperformed growth 70% of the time. In periods where GPD was between 3 and 5%, value outperformed growth only 32% of the time. With those statistics, small cap value could be thought of as a cyclical beneficiary. In addition, Lipper brought our attention to an interesting historic trend wherein the risk premium of small cap value equities relative to the 10-year treasury ballooned to 1.2%, double relative its 0.6% historic average which was already ahead of the 0.3% risk premium over the 10-year growth sported in the same period (12-31-2001-12-31-2021).

Diving more specifically into small cap value managers, Lipper commented that both quality and value are revered. The difference, he defined, is how managers prioritize between the two. With that distinction in mind Lipper segmented the conversation into 3 sections, Quality Value, Deep Value, and International Value.

Within Quality, Lipper pointed out that the top decile of companies (sorted by ROA and ROIC) outperformed the Russell 2000 index while valuations tended to settle lower as investors gravitated towards growth. He drew an analogy of the tortoise and the hare with quality value small cap companies being slow but underpriced consistent compounders. He suggested one could think of them as BB bonds in a high yield index insofar as they provide strong downside capture but can lag coming off the bottom.

                Deep value was illustrated as a very different animal. Steve argued the opportunity set in deep value is really entrenched in behavioral finance. The standard deviation of deep value is 4% above the index making it extremely difficult to hold even for the most resilient clients as periods of dramatic underperformance sow amnesia even among clients who were consulted well in advance. Lipper recommended pairing deep value with an ETF or a High Quality complement and then rotating as a means of acting on these ideas. While he gave everyone attending a pass to blame the clients for discomfort at the bottoms, he also reasonably reminded us that our brains are subject to the same emotional pitfalls. Nonetheless, with data in hand Lipper concluded that deep value is a reliable asset class even if it can be painful at times.

                Finally Lipper stressed the importance of International value as an asset class, stressing that if one thing should be taken away from the lunch it should be the importance of international value. First, it is extremely inefficient accounting for less than 1% of mutual fund assets. Second, 1300 of the over 4000 companies in the universe have 0 or 1 analyst covering them allowing for skillful mangers to add value by finding companies that can consistently compound into broader recognition. As a result, the average international small cap manager beat the index after fees. Finally, he noted the downside risk profile is more attractive than conventionally understood. While small cap international will lag its larger peers in terms of maximum drawdown in market volatility, the probability of loss of international small cap is actually lower than large international (82% vs 75%). In addition, in 85% of historical cases international small cap outperformed international broadly. These statistics and others drove both the conclusion that home bias could be a good explanation to the underutilization of the asset class and that international allocations should be properly diversified between international large cap and international small cap positions. 

To register for the CFA Society St. Louis popular monthly speakers, contact CFA at 314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. 


CFA Society St. Louis 2022 Forecast Dinner

February 10, 2022

Written by Alec Hubbard, CFA 

Investing is like Salsa Dancing, it's an exercise of seeing the expansion and contraction of your partner's muscles and responding.

That was the theme of CFA Society St Louis' February 10th forecast dinner event held at the Saint Louis Club. That theme was instilled by Dr. Camila Henao Arbeláez who presented on behalf of this year's forecast event sponsor T. Rowe Price. After earning her PHD in economics from University of Illinois Urbana-Champaign, Dr. Henao Arbeláez joined T. Rowe Price's multi action division as a quantitative multi asset analyst. She is no stranger to markets as a dancing partner and the importance of understanding where markets are within the dance of the business cycle. Evaluating 15 bear markets she demonstrated that 13 resulted during or soon after an official recession warranting why identifying where we are in a business cycle is so important to investment strategy.

To the benefit of our society, Dr. Henao Arbeláez  methodically spoke on a model she pioneered that 1) defines where we are within the business cycle, 2) captures turning points in the business cycle, and 3) uses cycle classifications to identify asset classes with the potential to outperform in the current state of the markets.

The caveats that challenge investment professionals today are twofold. First, the reliance on traditional macroeconomics data. Because it is reported quarterly or monthly, macroeconomic data struggles with increasingly short business cycles. Indeed, the Covid recession took only 2 months meaning one who relied entirely on traditional data could have missed it entirely.  Second, past data is often revised backwards which introduces biases when that data is used for investment purposes.

Camila's solution to these modern problems included leveraging big data. By obtaining high frequency data she accesses factors that are 1) high frequency, 2) not backwards revised, and 3) separated enough from explicit market returns to classify the differentials in asset class performance. With this enhanced access to data, Dr. Henao Arbeláez can better contextualize portfolios to signals in the current economic environment and the stage of the market cycle they communicate. Because of the recent lightning speed cycles, high quality high frequency data is becoming more necessary.

As far as input on the current environment, the model reads that we recently entered an expansionary phase with momentum performing positive. Dr. Henao Arbeláez holds, amidst other things, that the primary risk to the current market are external as opposed to something inherently wrong with the market. She encourages watching the Federal Reserve as it is likely to prioritize its mandate over the market which could create ripples.

Thank you to all in attendance both in person and digitally!

Congratulations to the Bullseye award winners. Tom Eidelman won the award for the S&P 2500, Clint Baur won the award for the crude spot price, and Mike Cody won both the 10 year treasury and stock selection awards.

Mike's impressive performance in the stock selection category paired with his background in fixed income motivated President McGrath to issue a call to action to the equity minded among us "do better!"

Should you seek to dethrone these champions, a link for this year's bullseye competition can be found here. (­)

To register for the CFA Society St. Louis popular monthly speakers, contact CFA at 314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. 



November 11, 2021

David Erickson, Chief Investment Officer of Ascension Investment, and Vincent Stegman, Ascension's Managing Director of Investments, addressed the topic of Impact Investing at their November 2 presentation to CFA Society of St. Louis.

Headquartered in St. Louis, AIM evolved from the Treasury Services and Investment Group of Ascension Health, a leading U.S. nonprofit healthcare system. Ascension Health had invested for itself for more than 10 years using outside investment consultants. In 2009, Ascension Health hired David Erickson, Ascension Investment Management's current CIO, as its first in-house investment professional. Ascension Health tasked Erickson with developing its investment team, establishing a new asset allocation philosophy, redefining its socially responsible investment guidelines, and recruiting experienced professionals to manage its assets.

"It all started with Sister Jane, who pushed us to do more for good with our food and housing investments," Erickson said. "The key was to do good but not sacrifice on investments. With lending and equity, we were able to solve problems." Erickson's impact strategy of social improvement and environmental impact targeting lower middle/working class/underserved populations was a success.

Recognizing that other institutional investors could benefit from this in-house investment program expertise, Ascension reorganized its Ascension Health investment team as Catholic Healthcare Investment Management Company (CHIMCO). CHIMCO was renamed Ascension Investment Management, LLC (AIM) in 2014 and employs 30 associates with $54 billion under management. AIM currently offers a wide variety of investment strategies and manages assets in accordance with a Catholic-based Socially-Responsible Investment Policy for a variety of institutional investors, either as an outsourced CIO solution or as an investment manager for select asset classes.

Stegman explained that private assets were used to secure long-term investments; had potential for measurable incomes; opportunities for partnerships with those with hands-on expertise; and the ability to directly invest in projects.

He discussed the realities of Impact Investing, including the personal focus, the fact that this type of investing is highly subjective and the industry is fragmented. There is a limited track record, although the market is maturing. If using private investments, a portfolio's liquidity and risk generally increase. And the market is smaller relative to other SRI investment options.

AIM is dedicated to sourcing 17 Sustainable Development Goals (SDGs) that target economic growth, environmental sustainability and social inclusion. Stegman gave examples of two Impact Investing case studies that supported several of these SDGs. First, an emerging markets-focused financial services fund, with an under-banked population and small/medium size businesses, fulfilling the goal of lowering poverty and boosting gender equality. The criteria for this small business lending program were the number of clients served; the amount of financing provided; average loan size and the number of jobs provided for underserved populations. A second Impact case study was a U.S. real estate fund for multi-family housing, where the impact metrics included providing affordable housing and reducing emissions, meeting the goals of responsible consumption and partnership.

ESG means something different to different people, but eventually there will be a framework and standards. Stegman advised investors considering Impact Investing to first define the impact, establish objectives and develop measurement criteria. He also suggested investors define the investment profile desired, including the return expected, liquidity profile, appropriate allocation strategy and to balance the return and impact expected. He stated it was important to secure advisor and board support, as well as an investor policy statement. Sourcing and due diligence as well as ongoing monitoring and reporting was crucial. In order to find companies with the balance of raw skills desired, it was important to get to know what motivates potential partners. Investing team members must value what they are able to achieve and make it their personal mission. Risk is big in a first-time fund and if there is not a lot of track record to count on, perhaps it is best to wait for Fund 2. Cost per benefit is a liquid benchmark. It's key to not sacrifice return just to be an Impact Investor. Cambridge does track Impact Investing benchmarks.

Erickson explained there are many funding situations that aren't a fit for AIM.  For example,      for-profit prisons and defense/weapons, which AIM is restricted from working with because of Ascension's Catholic values. Ascension has also started restricting funding for fossil fuel and energy projects. "The Ethics department will make a ruling," he said. "However, they are open to change and the list is constantly evolving. The lay community members point out the good that is being done. The Sisters don't want to do any harm."

To register for the CFA Society St. Louis popular monthly speakers, contact CFA at                314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. For information on joining CFA Society St Louis, visit






"Intentional career management involves polishing both your technical and soft skills," stated Dana Anton of CFA Institute (CFAI) as she described the many benefits of CFAI's Career Center platform during her presentation to CFA Society of St Louis on July 20.

Anton, who promotes CFAI's extensive suite of career management resources to CFA members around the country, also shares job opportunities among all CFA societies to provide members with a single place to start their job search.

She described how financial industry jobs require different blends of soft skills and technical skills. Soft skills include past experiences, motivating values and personality types. Technical skills include a head for math and a love of research. For example, a Research Analyst role depends on strong networking skills and communication skills. The Career Center can help a candidate identify and effectively present these skills.

Anton encouraged job applicants to follow the four Guiding Principles of intentional career management: 

1) Pick what motivates you; 

2) Leverage your natural strengths; 

3) Engage the help of a mentor; and 

4) Find a corporate culture that is the right fit for you.

Next, Anton lead the group through the steps of setting up a personal profile, building or uploading a resume, creating job search parameters and managing daily job alerts on the Career Center platform. She described the benefits of the platform's Interview Simulator, Elevator Pitch Builder, Document Manager, Career Assessment exercises and Career Pulse Assessment survey. The platform also includes a Career Resources section of helpful reports and tools, including the Professional Learning Tracker and Stackable Credits. She emphasized the value of volunteering within your CFA Society to grow your network of peers and to share your CFA achievements on social media.

Anton also detailed how the Career Center platform includes opportunities for employers to set up a Corporate Account for listing their financial industry job postings.

To register for CFA Society of St. Louis' popular monthly ZOOM conferences, contact CFA at  314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. For information on joining CFA Society of St Louis, visit





Michael Pompian, Founder and Chief Investment Officer of Sunpointe Investments, and author of the new book, Behavioral Finance: Putting Theory Into Action, gave a presentation to CFA Society of St Louis on July 13 at Saint Louis Club in Clayton.

Pompian began his presentation by identifying the biases that impact an investor's decision-making process and emphasizing that being familiar with these biases make us more strategic and successful investors.

He explained the four types of investment bias: Emotional Bias, Cognitive Bias, Belief Perseverance Bias, and Information Processing Bias. Next, he labeled the four Behavioral Investor Types: The Preserver, the Follower, the Independent and the Accumulator. The investor types that display an Emotional bias are the Preserver and Accumulator investors, while the investor types that display a Cognitive bias are the Follower and Independent investors.

Pompian then discussed the two primary choices an investor can be faced with when encountering irrational clients. After ensuring a client's financial security is safe, Pompian said the choice was to Moderate/Change the Cognitive bias or to Adapt the portfolio to the Emotional bias. He described how to moderate for the two different investor types. When dealing with mindful Independent and Follower clients, the key is to educate them with the facts. When working with emotional Accumulator and Preserver clients, it is more helpful to explain what the money will do for them and their family.

The author emphasized it is important to also be aware of what the advisor's bias is and how it is affecting the discussion. "Don't let politics drive your decisions," he cautioned his audience. "Don't invest based on politics, as the President has little influence on the market. The truth is, the market has always done better under a Democratic administration."

To register for CFA Society of St. Louis' popular monthly ZOOM conferences, contact CFA at 314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate. 





David Winer, a Portfolio Manager at Access Wealth Management in Louisville, Ky., answered questions about taking calculated risks with public equity market options during one of CFA Society of St Louis' popular monthly Zoom calls on May 19.

 Winer uses his extensive experience to execute AWM's Access Hedged Equity Strategy. David has been a member of the adjunct faculty at Boston University in the Questrom School of Business where he taught investment analysis and portfolio management. Additionally, David was an Executive-in-Residence at Boston University's Kilachand Honors College. David is the advisor to the Yale Undergraduate Diversified Investments club ("YUDI"), Yale University's largest undergraduate finance organization. He started his career in investment banking at Goldman Sachs in New York.

When asked what tools he used to calculate public equity market option risk, Winer said he used an old-fashioned calculator, an Excel spreadsheet and a Bloomberg terminal.

Winer uses Goldman Sachs' "Options Watch" data to determine whether conditions are more favorable for options buys versus stock buys. He advised CFA members to take a more educated risk by comparing the advantages of a Vertical Call Spread against a typical Break-Even Point and consider the results of using Strike-Puts in options buys.

"You don't automatically make money when taking a Buy The Call option," he said. He admitted he was often baffled by Goldman Sachs' recommendations to do so. Winer discussed other ways to take a trade and tilt the odds in your favor, particularly the Vertical Call Spread method. To evaluate risk in any option strategy, he suggests looking at three key factors: 1) What happens if the option value goes UP? 2) What happens if the option value goes DOWN? And, 3) What happens if the option value stays FLAT?

"You have to ask yourself, what is the worst thing that could happen?" Winer said, reminding CFA members that 90% of all options expire with no actual worth. He gave examples of how commonplace this is.

"Most lottery tickets expire without worth, but ticket buyers still buy them because there's always a chance that they might win. Although most casino-goers never recoup any of the money they spend on slot machines, people still go because of the chance they might win. Game Stop stock is another example of this, except this time it turned out to be a good trade."

 He advised working backwards from your risk tolerance point to minimize exposure, but reminded members that a low-risk buy will likely result in a capped reward. A greater risk can possibly result in a greater reward, but he cautioned that he was often astonished how few options buys actually do work out well.

Winer talked about hedging with a "Put," which acts like an insurance policy against risk, but doesn't often result in a large payoff. He discussed the advantages of choosing a Strangle buy or a Straddle buy depends on how these techniques are used. "It's basically a judgement call," he warned.

To register for CFA Society of St. Louis' popular monthly ZOOM conferences, contact CFA at  314-520-3564 or [email protected]. Please tell us if you are a CFA member to receive the member discount rate.




Chartered Financial Analysts (CFA) Society of St Louis continued its 2021 Environmental, Social and Governance (ESG) Series via Zoom with a panel of speakers on Monday, April 12.

CFA Society's Christine Sinicrope was moderator of the presentation, entitled, "Assessing ESG Risks & Opportunities." The speakers included Lori Keith, Director of Research and Portfolio Manager at Parnassus; Chris McDonald, Portfolio Manager at Kennedy Capital Management; and Lupin Rahman, Executive Vice President and Portfolio Manager at PIMCO. The group discussed ESG integration in investment analysis and portfolio management.

A ESG program is now commonly viewed as a must-have for companies, as companies are now routinely being evaluated on these non-financial metrics alongside more common financial ones.

Keith discussed that before there was ESG, there was Socially Responsible or Value-Based Investing. This involved a much broader definition of investing, primarily in high-quality socially active companies.

Rahman explained that by employing the strategy of excluding companies with reputational risk factors (such as nuclear power, gambling, tobacco & alcohol) wealth managers could screen for companies that were a match to client key values and goals. Threat of Divestment was another important way to reduce bad corporate behavior and get companies to change their long-term goals. And consumers often voted with their spending power to demonstrate what key values they support.

The ESG definition varies depending on the constituency you work with. There may be differing emphasis & tendencies. ESG ratings are important to investors and the over-riding goal is to embed ESG factors into all investments. Key concerns are risk factors within an industry. Advantages are best in class profiles, competitive advantages, ratings of products and services. ESG is a tool for alpha integration. You can't separate ESG from Fundamental Analysis. Companies use advantages in environmental/social investing to compete and win, particularly when the market driver is an environmental factor.

Rahman explained the 3 E's in ESG, specifically, Exclusion, Evaluation in-house & Engagement. ESG metrics and reporting are fast becoming a business requirement. Increased demand from investors, shifts in consumer and customer expectations, and policy changes under the Biden Administration mean companies are facing new pressure to measure, disclose and improve on ESG-related issues, including: Environmental (carbon emissions, water and waste management, raw material sourcing, climate change vulnerability); Social  (diversity, equity, and inclusion, labor management, data privacy and security, community relations) and Governance (board governance, business ethics, intellectual property protection).

Stakeholders see ESG as a view into a company's future. ESG reporting and ratings are also an important indicator of a company's overall health and ESG reports can tell a compelling story about the impact a company is making on the world. Tying all three elements of ESG into consolidated reporting, and to a broader strategy, indicates that a company is taking the necessary steps to be viable and profitable for the long-run. And that's exactly what investors are looking for in their portfolios.

Forward-thinking organizations are combining values, goals and metrics into business strategies to reduce ESG risks. They're also taking opportunities to innovate and reduce costs. The panel suggested starting with dependable third-party reporting that follows commonly accepted standards which stakeholders trust. This helps identify a company's strengths, weaknesses and key areas to work to improve, and also tells a positive story.

Accurate ESG reporting requires many organizations to start by utilizing better technology to boost the accuracy of their data. McDonald said, "the Devil is in the details." Third party data analysis is necessary to assist internal research and is essential to best outcomes. Sometimes lack of disclosure and reporting issues necessitate calls with companies to discuss details. His firm works to help companies to improve their ratings and research what good things the companies are already doing.

The panel discussed that there was a difference between a more traditional approach vs. an ESG focus in a portfolio. For example, investment companies would have to be fossil-free, with no company with carbon reserves or less than 2% of benchmark. The group suggested aiming for a lower risk than traditional portfolios, to keep an overall macro approach and ESG accts would have an additional layer of exclusion and scores.

Rahman pointed out that $68 trillion in wealth was about to be transferred to a younger, more socially and environmentally-aware generation. She stressed it was important to integrate now during this transfer as ESG investing became more mainstream. Peoples' environmental priorities will become clear in their investment strategies. For example, a company's ability to sell its brand will hinge on company behavior.

The panel then presented several ESG scenarios and gave advice on how to impact investments. In conclusion, McDonald stated, "ESC is a blunt instrument. It is very targeted money specific to a cause you believe in." The group summarized how ESG is about making a positive impact with everything we do, from how we act as a corporation to the investments we make on behalf of our clients.

To register for next month's CFA Society of St. Louis ZOOM conference, contact Joan Hecker, Executive Director, [email protected]. Please indicate if you are a CFA member to receive the member discount rate.           





CFA Institute (CFAI) representative Deborah Kidd kicked off the CFA Society of St Louis' Environmental, Social and Governance (ESG) Series this year on April 8 via Zoom.

Kidd, Director of Global Industry Standards, shared the work of her team, CFAI's recent ESG Consultation Paper and its upcoming ESG Disclosure Standards.

Kidd explained that setting industry standards is integral to the mission of CFAI. Because of the global influence CFAI has in ethics and industry professionalism, many regulators refer to CFAI codes and standards to inform their rule making.

In reality, asset managers have been striving to address investors' ESG-related needs for more than 30 years. The interest in ESG investment products has grown dramatically, due to popularity with like-minded investors, new ESG data and more regulatory focus on ESG and sustainable investment products.  Investors have been stumped by the flood of new terms, investment approaches, and investment products, including sustainable investing, socially responsible investing, responsible investing, ethical investing, impact investing, green finance, divestment, triple bottom line, conscious capitalism, ESG integration, values-based investing, exclusion, positive and negative screening, best-in-class, ESG overlay, ESG tilt, engagement, active ownership, and shareholder advocacy. The definitions of these and a many other similar ESG terms and methodologies have lacked universal consistency and meaning.

According to Kidd, CFAI research indicated many industry professionals were concerned that inconsistency and variation in ESG-related terms, investment approaches, and disclosures have led to confusion. It was widely felt that this misunderstanding between investors and asset managers could eventually lead to erosion of trust in the investment industry. The huge interest, resources and capital devoted to ESG investment products lead to a growing number of investment professionals calling for the development of a global standard to help align client objectives with product intent.

CFAI polled a geographically diverse group of industry experts, including asset managers, research analysts, consultants, asset owners, service providers, data providers, and nonprofit industry organizations. The results indicated a widespread opinion that the need existed for such a standard & CFAI was the one to do it.

 Kidd said in January 2019, CFA Institute issued the "Positions on Environmental, Social, and Governance Integration" white paper that expressed the organization's view that the consideration of relevant ESG information and risks is consistent with an asset manager's fiduciary duty. The organization felt it should require investment professionals to adhere to the CFA Institute Standards of Professional Conduct.

The policy paper stated that CFAI encouraged all investment professionals to consider ESG factors, where relevant, as an important part of the analytical and investment decision-making process. This would be regardless of investment style, asset class, or investment approach. In addition, it was the position of CFAI that marketing materials for ESG-related products and services must include detailed disclosures explaining the specific ESG process being used along with periodic verification that the stated ESG process, analytics, and consideration of factors are actually occurring.

Last August, CFAI issued a Consultation Paper proposing the scope and general principles of the new ESG Standard. During the 60-day public comment period that followed, CFAI received 100 letters and 3000 comments from 30 countries around the world—with 89% in support. Of those opposed, there were three main concerns: current ESG regulations, too many standards and the cost of standardization.

Since then, CFAI has analyzed the comments and developed a revised exposure draft, which they plan to release next month. After another 60-day public comment period, CFAI will compose a final draft in  July. By November 2021, CFAI plans to have created an initial guidebook of the Standard's ESG requirements to help interested investors understand how ESG fits into their portfolio and align their needs.

To register for next month's CFA Society of St. Louis ZOOM conference, contact Joan Hecker, Executive Director, at 314-520-3564  or [email protected]. Please indicate if you are a CFA member to receive the member discount rate.           




CFA Society of St Louis welcomed Penelope (Penny) Foley, the Managing Director and Portfolio Manager for TCW Emerging Markets Group, to its March 30 Zoom meeting.

Foley, with 40 years of experience investing in Emerging Market (EM) debt, has made a successful career out of an asset class that barely existed when she entered the investment world in 1974. Being an early investor in EM debt, Foley was one of few women in asset management. At the time, many men had little interest in EM crises, she explained, so women did a lot of the preliminary work. Ten U.S. presidents and seven recessions later, Foley helps to oversee $13 billion in EM assets with a leading global asset management firm.

Foley's group takes the big picture view and researches growth dynamics, country risk and market technicals. They then analyze hard currency sovereign debt, hard currency corporate debt and local currency debt. Understanding political change in Emerging Markets is an important part of Foley's qualitative analysis. Given the uncertainty ahead, the fund has no exposure to sovereign debt and very little exposure to local currency debt. She explained that it is crucial to protect yourself in the event of an unexpected consequence. While Foley takes big bets in countries like Argentina, Brazil and Turkey, she believes the best way to reduce the downside capture is to be nimble and avoid buying the index. There are 67 Emerging Markets in the index, but the fund only has exposure to about 40. "That means we don't find value in about a third of the index at any time," she said.

During Foley's tenure, the portfolio has managed to say ahead of the global hard currency index, despite a few bumpy periods. In recent years, it has again outperformed, suggesting that the fund may do better during periods of strong positive sentiment.

Foley presented that EM assets were under pressure at the start of 2021, largely driven the back-up in US Treasury yields, tighter lockdown measures in several major economies, slow vaccine rollouts and uncertainty around a potential US fiscal stimulus package.  Despite the market weakness, there was significant demand for EM debt, as new issuance totaled a record $115 billion in January. In addition, EM bond funds had net inflows of $13.1 billion during the month, largely split between hard currency and local currency funds.

According to Foley, EM continues to appear attractive as an asset class that benefits from stronger growth, particularly in the early stages of a business cycle. She says EM growth is forecast to rebound to approximately 6% in 2021, after falling around 2.5% last year. Much of EM growth, particularly in Asia and commodity exporting countries, is levered to growth in China, which is forecast to bounce back by 8% this year. Foley predicted a near-term bounce in the dollar on the back of US fiscal stimulus, boosting US growth, which may provide an opportunity to add EM foreign currencies.

To register for next month's CFA Society of St. Louis ZOOM conference, contact Joan Hecker, Executive Director, at 314-520-3564 or [email protected]. Please indicate if you are a CFA member to receive the member discount rate.           




Link to the video:

"Like Wayne Gretzky said, 'a good hockey player plays where the puck is, but a great hockey player plays where the puck is going to be,'" said Jason Hsu in his Zoom presentation at the CFA Society of St Louis's March 16 meeting. Hsu believes the puck is going to be in China.

Hsu, the founder, Chairman and CIO of Rayliant Global Advisors, a leading asset manager with offices around the world, detailed how industry trends, demographic shifts and organizational behavior research have now created an unparalleled opportunity for successful future investing in emerging Asia.

As one of the world's most recognized thought leaders in the Emerging Market space, Hsu explained his passion for educating investors and offering products to transform the investment ecosystem in Asia and beyond.  Hsu claims that China is now the dominant exposure within popular Emerging Market benchmarks. But most U.S. portfolios don't have a lot of onshore participation. Emerging Markets are dominated by the offshore components.

Hsu discussed that retail trading is 80-90% of volume in the Chinese stock market, while US retail trading is only 30% of all market activity. He explained that the best way to access exposure to China was with dedicated China allocation, as opposed to global allocation and broad EM allocation. He gave examples of past Chinese high-risk stock outliers, like Lucken Coffee and Alibaba founder Jack Ma. Hsu explained the difference between A and H shares, noting that hundreds of companies with dual listings tend to be the largest state-owned enterprises and tracking them gives investors an advantage. Hsu made the case for China having a stronger market performance in the next five years. He explained the value themes in recent Chinese market growth—COVID, 5G and semiconductor expansion. He said in the past, financial investors have preferred to service ultra-high stock through Hong Kong, where the rules were more welcoming and Western in scope. More recently, Singapore has offered protection from mainland China tax authority for high wealth investors, painting an apparent bleak future for Hong Kong. Compared to the U.S.'s more pricey S&P, China's CS130 has a more normal, median market cost. Hsu emphasized that investors access China alpha now and not be afraid of the smart beta revolution.



Hiring and retaining the best employees is top-of-mind for most financial services employers. Complicating things are the recent immigration and travel restrictions initiated by the Trump Administration and the COVID pandemic. The rules regarding hiring outside the U.S. have changed and the Work Visa application process has become bogged down in red tape.

Jeffrey Bell, the Chair of the Global Immigration and Mobility Practice for Polsinelli's 21 law offices nationwide, detailed how immigration issues can impact financial businesses' hiring practices via Zoom at CFA Society of St Louis's February 10 meeting.

Polsinelli's immigration team works with multi-national corporations, national, regional and local employers, start-up ventures, educational institutions, investors and individuals, providing a tailored approach to an array of immigration matters.

Bell explained how he assists clients in developing immigration strategic plans, securing visas and permanent residency status for key employees, and helping companies comply with immigration laws and requirements governing a global workforce.

His presentation began with a discussion of the short and long-term visa options to employ and retain talented foreign national students, college graduates and industry professionals. He detailed the steps to securing employment, volunteer and internship work authorizations. He talked about how employees comply with immigration legal requirements via the I-9 Employment Eligibility Verification form and how their sponsoring employers comply via E-Verify training. He explained the differences and benefits of Curricular Practical Training (CPT) and Optional Practical Training (OPT). He described how STEM Extensions are not popular with U.S. labor unions and how this policy might be forced to end or may be made harder to get in the future. He noted the requirements and costs to file a H-1B work visa application for this year's March 9-25 H-1B Visa lottery. The H-1B lottery is limited to only 85,000 total new hires per year. He presented the differences between the U.S. Work Visa (H-1B), the TN Visa for Canadian and Mexican professionals, the E-3 Visa for Australian professionals and the   H-1B1 Visa for Chile and Singapore. He also explained the three steps to achieving U.S. Permanent Residency or the Green Card.  This visa allows foreigners to permanently live, work & travel within the US with no time limit or expiration, however, U.S. Immigration law limits the number of Green Cards issued each year.

To register for next month's CFA Society of St. Louis ZOOM conference, contact Joan Hecker, Executive Director, at 314-520-3564 or [email protected]. Please indicate if you are a member to receive the member discount rate.   


Monetary Policy with Federal Reserve Bank of St. Louis - 

James Bullard 2-3-2021

Link to recorded video




Federal Reserve Bank of St. Louis President/CEO and TV host/commentator James Bullard praised the effectiveness of U.S. monetary policy in buoying the economy during a dysfunctional political cycle and the COVID crisis.

According to Bullard, who presented "The Pandemic Endgame Begins" via Zoom at CFA Society of St Louis's February 3 meeting, the Fed acted very quickly in response to the COVID crisis. Associated macroeconomic outcomes were considerably better than originally expected at the start of the pandemic. He said the emergency lending programs stemmed an impending financial crisis that could've occurred on top of the COVID crisis. He noted that the fiscal response drove personal income up to an all-time high in the second quarter of 2020, which is the opposite of what normally happens in a recession. Third-quarter real GDP growth was the fastest on record. In addition, the Coronavirus Aid, Relief and Economic Security (CARES) Act, along with the Consolidated Appropriation Act, provided trillions more in pandemic relief.

Bullard stated that U.S. monetary policy included lowering the policy rate to the effective lower bound and providing liquidity to financial markets through a variety of programs supported by the U.S. Treasury, including purchases of U.S. Treasury securities and mortgage-backed securities. The Fed's monetary policy pace will continue until substantial further progress has been made toward the maximum employment and price stability goals.

Bullard also noted that employment has rebounded more rapidly than expected, supporting the theory that many layoffs were temporary as firms adjusted to the crisis. As a result, the U.S. labor market recovery is four years ahead of where it was following the 2007-09 recession.

Bullard explained that although the COVID pandemic fatality rate has stabilized in East Asia and Pacific countries, it has severely worsened in the U.S. and Europe. However, Bullard predicted that the early arrival of several effective new vaccines will reduce the U. S. COVID death rate, enable workers to go back to work and allow the health crisis to wane by the middle of this year. This will have a big effect on the economy, with GDP and unemployment levels projected to return to pre-COVID levels by Q3.

He cautioned that the U.S. is still in the grip of the pandemic and risk remains with the recent spread of COVID variant strains for which the vaccines may not be as effective. He warned the continued execution of a strict national health policy will be critical in the months ahead.

Bullard also discussed his inflation expectations, proclaiming market-based targets have recovered from last year's lows. He noted that TIPS-based break-even inflation, which is based on consumer price index (CPI) inflation measures, could move much higher and still be consistent with a personal consumption expenditures price index (PCE) inflation outcome slightly above the current 2% inflation target.

To register for next month's CFA Society of St. Louis ZOOM conference, contact Joan Hecker, Executive Director, at 314-520-3564  or [email protected]. Please indicate if you are a member to receive the member discount rate.           



Blogger, Podcaster and Northern Trust's Director of Practice Management and Advisor Research Laura Gregg gave a woman's point of view on diversity, inclusion and equity in the financial advisor industry during CFA Society of St Louis's January 21 ZOOM presentation.

According to Gregg, attracting and hiring more diverse talent still ranks among the least important of business priorities. Research shows the vast majority of firms still recruit using personal networks of friends, family and neighbors. Gregg emphasized it's important to aim for diversity across race, gender, LGTBQ status and disability. As diversity can be measurable, equity and inclusion are qualitative. Leadership needs to own a diversity mindset and evaluate progress often.

Gregg moderated today's call with two other powerful Chicago women, Northern Trust Executive Vice President and Head of Corporate Social Responsibility, Connie Lindsey, and UBS Wealth Advisor, Laurie Barry.

Lindsey is responsible for corporate global diversity, equity and inclusion strategy and serves on several civic and charitable boards, including as former National Board President of Girl Scouts of the USA. She was named one of Chicago's Top Black Women of Impact in 2019.

She emphasized the need for business leaders to track and meet regularly to discuss corporate culture. Diverse, inclusive and equal work place cultures take time to build, but the rewards for a company are enormous. Results include engaged and empowered employees, enhanced reputation and stakeholder relationships, and inspired leadership.

Lindsey used a dance analogy to illustrate what changing your corporate culture really means.

"Diversity is like being invited to attend a dance. Inclusiveness is like being asked onto the dance floor. But Equity is when I get to pick the song that I'm going to dance to."

Radio and television financial commentator Barry has developed special relationships with her women clients, who represent nearly three-quarters of her practice. Over the years, Barry has reached out to women decision-makers through nonprofit work and speaking engagements, seeking to provide them with sound investment advice. Barry was named a 2017 Chicago Woman of Influence by The Chicago Business Journal and was named 2018 Top Wealth Advisor Mom by Working Mother Magazine.

Barry said her firm's first step to launching a more equitable work environment came with issuing a statement: "Silence is not an option." She instituted corporate fireside chats in which she encouraged employees and partners to discuss diversity openly & not be afraid to ask questions. They reached out to other groups of women, LGBTQ, veterans and young professionals. They were happy to participate in focus groups & become educated about the values of their diverse Chicago community.

To register for next month's CFA Society of St. Louis ZOOM conference, contact Joan Hecker, Executive Director, at 314-520-3564  or [email protected]. Please indicate if you are a member to receive the member discount rate.