Bloomberg - Where To Invest $10,000 - 02-Feb-20

2/2/2021 Top Investment Advisors: Where to invest $10,000 in 2021
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Where to Invest
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Five veteran investors share their best
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Illustration: Steph Davidson
By Suzanne Woolley
June 20, 2016 | Updated on January 27, 2021
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It was a year to forget and a market to remember.
Stock markets finished the year by adding to gains they had already made during the
height of the pandemic. Positive news on Covid-19 vaccine trials helped lift markets in
the fourth quarter, with the MSCI World Index up 13%, the S&P 500 up 11% and the “it”
stock of the year, Tesla, up 58%.
Relief about the start of vaccination rollouts, though, was quickly met with news of a
variant strain of the coronavirus that led to lockdowns in countries including the
U.K.,
YourGermany and
monthly limit ofChina. Whileis negotiators
free content struck
about to expire. Stayaon
Brexit
top ofdeal, instability ruled theor
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historic
day, with market volatility. Try
an insurrection 3 months
in the for $105emerging
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and a still-nebulous
Your
relationship
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China and the U.S.
about to expire.
That’s anaunsettling
Already subscriber picture. But even
or Bloomberg Anywherenow,client?
money managers
Sign In in our quarterly panel see
pockets of opportunity. The panelists highlight investments that range from high-yield
municipal bond funds
Already a subscriber or to equitiesAnywhere
Bloomberg in Japanclient?
and Vietnam.
Sign In For those who want to use
Stay on top of historic
exchange-traded fundsmarket volatility.
to invest in theseTryideas,
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Bloomberg Cancel anytime.
Intelligence ETF analysts
Eric Balchunas and Morgan Barna suggest funds that can serve as good proxies.
This quarter, we asked panelists a second question: If another $10,000 fell in their lap
(it’s a nice fantasy), and assuming they’d already given to charity, what creative ways
would they try to put that money to work, beyond traditional investments? Answers
ranged from going long on rare scotches and bourbons to investing in a landscaping
project with succulents.
Before committing money to the markets, be sure you’ve stocked up on emergency

savings — ideally, at least six months’ worth of expenses. If you’ve nailed that, as well
as “The 7 Habits of Highly Effective Investors,” you’ve built a good margin of safety.
‫ﺟدﯾد‬ ‫ﺟدﯾد‬
Russ Koesterich
Portfolio manager, BlackRock Global Allocation Fund
Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019
Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017
Buy
Yourthe Newlimit
monthly Leaders
of free content is about to expire. Stay on top of Already a subscriber or
Investors
anytime.face two big questions in 2021: Will the economy continue to recover, and Signhas
In
the market rally gone too far? My own view is that a strong economy will lead to further
market
Alreadygains, albeit with
a subscriber differentAnywhere
or Bloomberg leadership. Given
client? Signthis
In dynamic I would look for
market segments that trailed last year but will benefit from an accelerating economy.
This leads
Already me to favor
a subscriber orindustrials.
Bloomberg Anywhere client? Sign In
S i ih h b d hil h j f h
https://www.bloomberg.com/features/how-to-invest-10k/?ll_push_args=%7B"utm_source":"push","utm_medium":"notification"%7D i i l 3/11
Starting with the broader economy, while the near-term trajectory of the virus is a real
risk, growth should accelerate thanks to the vaccine rollout, massive stimulus, rock-
bottom interest rates and strong demand from consumers.
The U.S. consumer is in surprisingly good shape. While unemployment is elevated, jobs
are returning. Households are further supported by manageable debt levels, record-low
debt servicing costs and the highest savings rate since the early ’70s.
Household demand, particularly for durable goods, has supported manufacturing. In

August, the new-orders component of the ISM manufacturing survey hit its best level
since 2003, and recent data confirms that orders remain robust. A combination of low
inventory levels and solid spending should continue to support manufacturing.
How to play it with ETFs: Invesco DWA Industrials Momentum ETF (PRN) gets the nod
from Balchunas and Barna of Bloomberg Intelligence. The fund posted a gain that topped
33% in 2020, which outpaced the broader sector by more than 18%. The fund holds at least
30 securities that exhibit the best relative strength from the benchmark, rebalancing
quarterly. The $190 million fund has an expense ratio of 0.60%.
Performance of last quarter’s ETF plays: The ETF suggested by Balchunas and Barna,
the Invesco Dynamic Semiconductors ETF (PSI) , had a 31.8% gain in the fourth quarter.
Another way to play it: Go long on rare scotch and bourbons. In 2000, my parents were kind
enough to gift me a bottle of 25-year-old Macallan scotch. At the time, a bottle sold for
around $300. Today you’re lucky to find one for $2,000. For investors with richer tastes,
prices go much, much higher. A bottle of 50-year Macallan lists for around $80,000. And
anyone who’s recently attempted to find a bottle of Pappy Van Winkle bourbon knows that
it’s like searching for a unicorn. The Fed may print money with abandon, but distillers seem
to know how to limit supply.
historic market volatility. Try 3 months for $105 $6.‫ ﺟدﯾد‬Cancel Bloomberg Anywhere client?
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S h K tt
Sarah Ketterer
Chief executive officer and fund manager, Causeway Capital Management
Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019
Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017
Q1 2017 Q4 2016 Q3 2016
Follow the Money — to Renewables
Renewable energy is a snowball-turned-avalanche. “Net-zero” carbon-emissions goals

have become the norm with the European Union, the United Kingdom, Japan and
South Korea targeting 2050, while China is aiming for 2060. Under President Joe
Biden’s administration, the U.S. will likely announce a similar net-zero goal for 2050.
The subsidies and investment spending needed to achieve this global energy
transition could add up to trillions of dollars. And with more production, renewables
such as solar and wind have reached cost parity with fossil fuels, no longer needing help
from subsidies.
Admittedly, many companies that stand to benefit have seen their share prices reflect
this bullishness. Yet some bargains remain, such as the European power utilities
that are rapidly transitioning to solar, wind, hydro, geothermal and other renewable-
energy sources. The better-capitalized integrated oil and gas majors may also benefit,
since they have the cash flow and technological capabilities to diversify their portfolios
away from fossil fuels.
How to play it with ETFs: Balchunas and Barna point to the First Trust NASDAQ Clean Edge
Smart Grid Infrastructure
Your monthly limit of free Index Fund
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EnergyTry 3ETF
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have soared. GRID holds companies in the smart-grid and electrical-energy infrastructure
sector, including
Stay on storagemarket
top of historic for clean-energy alternatives.
volatility. Try 3 months forIt has
$105tiered weighting,
$6. Cancel with 80% of
anytime.
holdings in pure-play firms. The $176.5 million fund has an expense ratio of 0.70%.
Performance of last quarter’s
Already a subscriber ETF plays:
or Bloomberg AnywhereBalchunas and In
client? Sign Barna’s choice, the iShares MSCI
Stay on
Europe top of historic
Financials market volatility.
ETF (EUFN) , rose Try 3 months
27.6% for $105
in 2020’s fourth$6. Cancel anytime.
quarter.
Another way to play it: I’d buy airline tickets for travel in the second half of 2021. Round-trip
business-class tickets from Los Angeles to London (Heathrow), with no change fees, are
priced so low that the $10,000 will more than cover two tickets — with enough left over for
several nights in a luxury hotel. In the pre-pandemic travel heyday, one business-class ticket
cost $10,000, with the burden of change fees. When airline travel demand recovers in 2021,
expect ticket prices to rise.
Brian Singer
Portfolio co-manager, William Blair Macro Allocation Fund
Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
Look to Vietnam
Vietnam is among the more attractive equity markets as we exit the pandemic-ridden
year of 2020 and enter 2021 hopeful that the worst is behind us.
The country continues to deliver among the highest GDP outcomes, with our most
recent growth estimates at 3% for 2020 and 7-8% for 2021. This growth has been
underpinned both by favorable domestic drivers such as demographics,
consumption and infrastructure as well as a steady improvement in economic freedom
and policy variables.
historic has
Vietnam market
gonevolatility.
from aTry 3 months
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major regional trade deals. In addition, in 2020
policymakers agreed to, and began
implementing
Stay on top of the EU-Vietnam
historic free trade
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3 months forAnd
$105while far from
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during Covid-19, Vietnam has demonstrated an ability to weather and navigate the
pandemic’s
Stay on topchallenges relatively
of historic market efficiently.
volatility. Try 3 months for $105 $6. Cancel anytime.
Stay onthe
Despite toprecent
of historic market
rebound volatility.
and Try 3 months
rally, Vietnam’s for $105
equity $6. Cancel
market anytime.
is priced more than 40%
below fundamental value. It will continue to benefit from increased trade and supply-
chain diversification. As capital markets develop and expand, so will investment
options. Investors can obtain broad exposure through locally based and managed funds
trading on the London Stock Exchange such as Vietnam Enterprise Investments Ltd.
(VEIL.LN) or VinaCapital Vietnam Opportunity Fund Ltd. (VOF.LN). The lone U.S. ETF
is the VanEck Vectors Vietnam ETF (VNM; not to be confused with one of Vietnam’s
larger companies, Vinamilk).
How to play it with ETFs: VanEck Vectors Vietnam ETF (VNM) tracks the country’s listed
equity market. The largest sectors are real estate (25%), food (14%) and electronics (14%).
The expense ratio is 0.64%.
Performance of last quarter’s ETF plays: The VanEck Vectors ChinaAMC China Bond ETF
(CBON) gained 4.8% for the quarter.
Another way to play it: To create a relaxing, stress-free environment for you and your family,
there is nothing better than investing in aquariums. If $10,000 drops in your lap, I
recommend buying a fish tank. You could consider a saltwater, mini-reef version. It’s
important to buy good equipment, practice regular testing and maintenance, and treat the
fish like household pets. Choosing your inhabitants is part of the fun, but I find that a broad
ecosystem — even if small — is fun to watch. Shrimp, sea urchins, coral and fish provide a
fascinating environment to observe. Everything is in a continual state of cooperation and
conflict, a complex symbiosis. Best yet, the benefits of a complex, adaptive system — much
as capital markets — afford entertainment, challenge and knowledge. It pays big dividends
over the long term.
Ian Harnett
Chief investment strategist, Absolute Strategy Research
anytime. Sign In
Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019
Stay
Q1 on topQ4
2019 of 2018
historic Q3
market
2018volatility. Try 3 months
Q2 2018 Q1 2018for $105 $6. Cancel anytime.
Beware Tech, Favor Japan
The strong way that markets finished 2020 suggests that a lot of the good news for the
year ahead has already been factored in — confirmed by the almost uniform optimism
found in most investor surveys.
It would be easy to follow the crowd and recommend equities or Bitcoin. But the current
optimism has pushed valuations for global stocks to levels higher than those seen at the
peak of the tech bubble in January 2000. These valuations are often justified by policy
rates close to zero. For us, justifying extreme valuations in equities with extreme
valuations in bonds simply highlights the fragility of market conditions. Any change in
the balance between activity and inflation could challenge these valuations in 2021.
Given the recent pick-up in Covid-19 cases in the U.S. and some European economies,
we see increased risks of a brief “double-dip” recession in Western economies. Asia
looks well placed to gain from any such economic uncertainty and we see Japan as a
better way of playing this than emerging-markets equities, which look expensive.
A brief economic downturn might see some of the cyclical sectors that performed well
last quarter — such as autos, industrials and basic materials — give back some gains,
with investors likely to buy cheaper defensive sectors such as health care, food
producers and personal goods. We think tech is over-owned, over-valued and subject to
regulatory and tax-related risks. On a 12-month view, our tech caution favors value vs.
growth, and we’d look for any short-term economic weakness as an opportunity to make
that switch.
How to play it with ETFs: Balchunas and Barna say the JPMorgan BetaBuilders Japan ETF
(BBJP) is one way to add passive, tactical exposure to the Japanese market. The
expense ratio of
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Performance of last quarter’s ETF plays: The Industrial Select Sector SPDR Fund (XLI)
rose 15.5%
Already in 2020’s or
a subscriber final quarter. Anywhere client? Sign In
Bloomberg
Stay onway
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would invest Try 3 months
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https://www.bloomberg.com/features/how-to-invest-10k/?ll_push_args=%7B"utm_source":"push","utm_medium":"notification"%7D il b 8/11
a WWII fighter, such as a Mustang or Spitfire. However, as the rest of my family members
are keen sailors, it would be great to visit one of the classic yacht regattas in the Caribbean.
Terri Spath
Chief investment officer, Sierra Mutual Funds
Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
Sample High-Yield Munis
Interest rates are still on the floor, and we are regularly asked whether investors should
abandon all flavors of bonds. We respond with a firm “NO.” Specifically, we recommend
high-yield municipal bonds.
The Covid-19 pandemic remains in the U.S., as everywhere, the dominant theme. Even
so, default risk is lower than perceived as most municipalities have begun the process of
cutting spending and preserving liquidity. As a result, the credit outlook has improved
markedly for municipal bonds.
The second reason we recommend high-yield municipal-bond funds is their juicy tax-
equivalent yields. (Interest on most state and local debt is exempt from income taxes; a
tax-equivalent yield tells you what the (higher) yield on a similar taxable bond would
have to be, after accounting for income tax, to offer an investor the same return.) Our
top pick sports a yield of more than 3.6%, which equates to a 5.3% yield for investors in
the 32% tax bracket.
Finally, investor
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market to quench their thirst. Lower supply and high demand should equate to higher
prices.
We guide investors to actively managed funds, where managers can add value by
avoiding
Already aweak muni or
subscriber issuers. We recommend
Bloomberg the Sign
Anywhere client? BlackIn Rock High Yield Municipal Bond
Stay(MDYHX).
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it is a sure way to underperform.
How to play it with ETFs: For those who do want to use an ETF, Balchunas and Barna
suggest looking at the First Trust Municipal High Income ETF (FMHI) . The actively
managed municipal bond fund has a focus on high yield and currently yields 3.1%. More
than 65% of the fund's positions mature in over 10 years. FMHI has $140 million in assets
and an expense ratio of 0.55%.
Performance of last quarter’s ETF plays: The iShares MSCI Taiwan ETF (EWT) saw its
price rise 19.4% for the quarter.
Another way to play it: I would spend absolutely every dime purchasing succulents and
agave for my indoor and outdoor landscaping. They pretty up beautiful gardens and
container arrangements like no other plant, are easy to grow, and can be edible,
including the “prickly pear.” While you can purchase these on a budget, a beautiful outdoor
landscape project can run to $10,000 or more. Well landscaped homes command 5% to
20% more in value, easily paying for the cost of installation and care. In the meantime, you’ll
enjoy the unique beauty (and lower water bills).
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2/2/2021 Top Investment Advisors: Where to invest $10,000 in 2021

What does the data say about

Menu Search Bloomberg Sign In Subscribe

Illustration: Steph Davidson

It was a year to forget and a market to remember.

Before committing money to the markets, be sure you’ve stocked up on emergency

Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019

Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017

Household demand, particularly for durable goods, has supported manufacturing. In

Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019

Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017

Q1 2017 Q4 2016 Q3 2016

Follow the Money — to Renewables

Renewable energy is a snowball-turned-avalanche. “Net-zero” carbon-emissions goals

Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019

Beware Tech, Favor Japan

Now Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019

Sample High-Yield Munis

it is a sure way to underperform.

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