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New Asset Class Coverage Initiated Last Year

This is the final installment in the series of blog posts from my 2020 End of Year Special Report. This is perhaps one of the most interesting and important sections of the report.

Interesting because by this stage, anything new is typically relatively obscure - or came onto the coverage list for specific (timely) reasons.

Important because I believe strongly in innovating, challenging myself, and being responsive to client requests.

Some of my expansion of coverage comes from my own curiosity, but in many instances a client has asked me something along the lines of "do you have any material on [asset/market]?" I sort of half jokingly say that the answer to that question is always "yes." ...which in many cases is followed by me scurrying off to source and develop the basic datasets: put together some key indicators and charts: and then tie it all together with some commentary to present a meaningful (useful) conclusion.

That's one of the parts I really enjoy about my work.

Of course, expansion is not just new assets, but also going deeper within existing areas of coverage, and digging up new info; devising new ways of looking at things.

By this stage I feel it has become a talent of mine. Again, partly by interest, partly by necessity. After all, this is a competitive endeavor, which means there's no standing still. You're either moving forward or going backwards.

So let's move forward into the charts!

1. Agricultural Commodities: Going beyond just grains (which I have kept tabs on for a number of years now), I expanded coverage here to a broader look at agricultural commodities, and the timing proved quite good as prices began to breakout.

The chart shows food producer capex collapsing: a key fundamental reason for the breakout.

chart of agricultural commodity capex

2. Global Banks: I built out a suite of valuation, fundamentals, and technical indicators for the global banking sector (including regions). This also helped add some color to the value vs growth theme (where the banks/financials sector is a key overweight on the value side).

chart of global bank price to book ratios

3. Global Listed Infrastructure: Coverage initiated for this niche asset class (including expected return figures), upon the request of a client (...and right at the bottom of the market: and yes the initial view was bullish based on valuations and technicals).

chart of global listed infrastructure valuations

4. Safe Haven FX: Another area initiated at the request of a client involved the construction of a basket of safe haven (vs risky) currencies. An interesting basket to trade, but also interesting applications from an analytical standpoint in that times where it had underperformed were often times of risk-taking excess, and times where it had outperformed were often times of peak-panic.

chart of safe haven FX valuations

5. Frontier Market FX: Frontier Market (FM) Equities were a feature in this section in the previous year (I began to build coverage in 2019), but this time it’s about formal coverage of FM FX (using an equal weighted basket). This is particularly for FM equities, given the impracticalities of FX hedging for this asset class -- having a view on the currency side of things is very important.

chart of frontier market fx

6. Dividend Futures: Another client request, and another area of the markets that is both interesting in terms of opportunities as well as analytical insights. As part of the analysis, I built a continuous series to help add insight to what is a relatively obscure instrument. Certainly something to keep tabs on.

chart of dividend futures analytical indicators

This is an excerpt from my 2020 End of Year Special report - click through to check out the report (and while you're at it be sure to sign up for a trial of my research service!).

Hope you found this interesting, and indeed it will be interesting to see what I add to the list this year! If you'd like more info on any of these just get in touch or request a trial.

Best regards

Callum Thomas

Head of Research and Founder of Topdown Charts

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