In this episode of KayneCast, host Jordan Greenhouse is joined by Rich Sherry, Senior Portfolio Manager and Research Analyst for the KAR Global Dividend Yield Portfolio. Sherry’s stock market review covers the impact of geopolitical events on global high dividend yield stocks for the first quarter of 2022, while analyzing the possible impacts such events will have on the stock market for the remainder of 2022.
Key Drivers for the Stock Market in Q1 2022
Q1 2022 saw increasing volatility, leading to overall flat and negative returns across most equity classes. Key drivers included continuing supply chain disruptions related to the COVID-19 pandemic, inflationary pressures, and a hawkish Fed that is “raising interest rates and potentially unwinding the quantitative easing that it has been undertaking for a while now in order to help stimulate the economy post COVID.”
In addition, China’s zero-COVID policy led to the country’s widespread shutdown of major centers, including Hong Kong and Shanghai, raising concerns such actions might extend supply chain disruptions and suppress global demand. The ongoing war in Ukraine also impacted the markets, with concerns that rising energy prices may contribute to a European recession later in the year.
Despite these factors, KAR’s Global Dividend Yield Portfolio outperformed its benchmark due to the portfolio’s focus on solid, mature companies which Sherry believes hold up well in times of economic uncertainty.
Looking to Q2 2022 and Beyond
Sherry notes that while the “Fed has already started raising interest rates…the war in Ukraine has put somewhat of a damper on how much and how fast they may raise rates.” At the same time, the possibility of a European recession due to the lack of Russian-held energy has the market concerned.
In such circumstances, Sherry points to the need to “construct a diversified portfolio that includes businesses that stand to benefit from higher interest rates, such as banks and insurance companies,” as well as companies such as specialty chemical companies, which he believes are well positioned for a world with higher inflation.
Global Dividend Fund Contributors and Detractors
Listen to the podcast above to learn more about the top contributors and detractors in KAR’s Global Dividend Yield strategy for Q1 2022.
Learn more about the Kayne Anderson Rudnick Global Dividend Yield Portfolio today.
This information is being provided by Kayne Anderson Rudnick Investment Management, LLC (“KAR”) for illustrative purposes only. Information contained in this material is not intended by KAR to be interpreted as investment advice, a recommendation or solicitation to purchase securities, or a recommendation of a particular course of action and has not been updated since the date of the material, and KAR does not undertake to update the information presented should it change. This information is based on KAR’s opinions at the time of the recording of this material and are subject to change based on market activity. There is no guarantee that any forecasts made will come to pass. KAR makes no warranty as to the accuracy or reliability of the information contained herein.