Entry Points | From ZIRP to ARK

Why investing for the next 10 years won't look anything like the last 10 years.
13 July 2023
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Senior Portfolio Manager Mark Donovan, CFA, explains how the end of the Fed’s zero interest rate policy refocuses attention on value and active management.

Catalysts in Play: The Federal Reserve’s zero interest rate policy (“ZIRP”), which was a powerful force fueling speculation over the past several years, is effectively coming to an end, which means the next decade for investors isn’t likely to be the same.

Entry Points: ZIRP gave investors a reason to ignore valuations, with multiples for many tech stocks reaching astounding levels. The ARK Innovation ETF represents a poster child of this era, investing in companies based on predictions of what they might do in the future, even if they are losing money today. Though valuations don’t always drive the markets in the short run, prices do matter in the long term, especially once speculation comes to an end.

  • Lessons of the Dotcom Bubble. The bursting of the Internet bubble in 2000 showed that tech is no different from any other part of the market. Back then, companies like Cisco and Intel achieved peak valuation levels and, in many cases, never returned to those multiples, demonstrating that even large, household names are not immune from capitalism’s competitive forces. Investors in today’s market have become too complacent about the moats surrounding the biggest stocks. That could change going forward.
  • The End of ZIRP: The Fed’s change in interest rate policy in 2022 was the catalyst that broke the back of the speculative end of the market, with a large percentage of high-multiple stocks falling 50% or more in the calendar year.
  • The Road Ahead: While the Fed will pause in the summer to see how successful rate hikes have been at driving down inflation, we’re a long way from rate cuts, even if investors are hoping for a quick Fed pivot. Meanwhile, the probability of a recession is relatively high now given credit tightening, reduced fiscal stimulus, and the lagged effect of Fed rate increases to soften the economy.

Active Strategy: This landscape sets up opportunities for active management and value investing. Due to the top-heavy nature of the S&P 500, in which five names now account for nearly a quarter of the index, success is being determined by the performance of that handful of companies. This is an opportunity for active management with an analytic edge to find neglected or overlooked stocks at a bargain.

At Boston Partners, we look for a combination of strong business fundamentals, attractive valuation, and positive business momentum. To us, these are the three laws of investment physics. We believe our focus and unwavering discipline around these principles give us an analytic edge over competitors.

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For a full transcript, click here.

For questions or additional information, please contact us.

Definitions:
S&P 500 Index: The Standard and Poor’s 500, commonly called the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.

Disclosures:

Boston Partners Global Investors, Inc. (“Boston Partners”) is an Investment Adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration does not imply a certain level of skill or training. Boston Partners is an indirect, wholly owned subsidiary of ORIX Corporation of Japan (“ORIX”). Boston Partners updated its firm description as of November 2018 to reflect changes in its divisional structure. Boston Partners is comprised of two divisions, Boston Partners and Weiss, Peck & Greer Partners (“WPG”).

The views expressed reflect those of Boston Partners as of July 14, 2023. Any such views are subject to change at any time based on market and other conditions and Boston Partners disclaims any responsibility to update such views. Discussions of market returns and trends are not intended to be a forecast of future events or returns.

Estimates reflect subjective judgments and assumptions. There can be no assurance that developments will transpire as forecasted and that the estimates are accurate.

 

Molly Clements

Research Analyst

Ms. Clements holds dual B.A. degrees in Economics and Psychology from Hobart and William Smith Colleges. Ms. Clements began her career in the industry in 2024.

Ms. Clements is a Research Analyst for Boston Partners, serving on the Sustainability and Engagement team. She joined the firm in January 2024. Ms. Clements is responsible for original ESG/sustainability research on companies held in Boston Partners’ portfolios.

Matthew Donovan

Equity Analyst

Mr. Donovan holds a B.A. in Economics from the University of Pennsylvania. Mr. Donovan began his career in the investment industry in 2022.

Mark Donovan

Mr. Donovan is an equity analyst with Boston Partners specializing in emerging markets financials, telecommunications, food, beverage & tobacco, restaurants, hotels and personal products. Prior to this, he was a Research Analyst for the Boston Partners Sustainability and Engagement Team. He was responsible for original ESG/Sustainability research on companies held in Boston Partners’ portfolios. Mr. Donovan joined Boston Partners in February 2022.

Elizabeth Sheerin

Relationship Manager

Ms. Sheerin holds a B.S. degree in business management from Babson College. Ms. Sheerin began her career in the industry in 2009.

Elizabeth Sheerin

Ms. Sheerin is a member of the Relationship Management team at Boston Partners and she joined this team in 2011. She works with many of our key domestic and international clients in a client service and relationship manager capacity. Prior to joining our firm in June 2011, she was a Client Service Representative at Putnam Investments. She also held several financial services related internships including working for Merrill Lynch Global Wealth Management and State Street Global Advisors.

Kara Pattipati, CFA

Product Manager

Ms. Pattipati holds an M.A. in International Relations from the University of St. Andrews. She holds the Chartered Financial Analyst® designation. Ms. Pattipati began her career in the industry in 2012.

Kara Pattipati

Ms. Pattipati is a member of the Relationship Management team at Boston Partners. She works with many of our key domestic and international clients in a client service and relationship manager capacity. Prior to joining Boston Partners in November 2016, she was a business development associate at Geode Capital Management.

Marlon Thompson

Equity Trading Assistant

Mr. Thompson holds a B.S. degree in finance from Boston College. He began his career in the investment industry in 2011.

Marlon Thompson

Mr. Thompson is an equity trading assistant for Boston Partners. Prior to assuming this role, he worked as a portfolio operations analyst. Before joining the firm in May 2021, Mr. Thompson held several roles including Vice President of Operations at Benefit Street Partners LLC and positions at International Fund Services (IFS) and Pioneer Investments.

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Edward Stansky

Equity Analyst

Mr. Stansky holds a B.S. degree in economics from Duke University and a M.B.A. from NYU’s Stern School of Business. He began his career in the investment industry in 2016.

Edward Stansky

Mr. Stansky is an equity research analyst with Boston Partners specializing in the energy, metals & mining sectors of the equity market. He joined the firm in September 2021. Prior to this role, he worked as a high yield and leveraged loan analyst at DDJ Capital and as an investment banking analyst in debt advisory at BofA Merrill Lynch.

Jonah Frank

Equity Analyst

Mr. Frank was a student at Boston University where he earned a B.S. degree in business administration with a concentration in finance and management information systems. Mr. Frank began his career in the investment industry in 2021.

Jonah Frank

Mr. Frank is an equity research analyst with Boston Partners specializing in emerging markets energy and materials sectors of the equity market.

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John Zhao

Equity Analyst

Mr. Zhao holds a Bachelor of Arts degree from the Richard Ivey School of Business at Western University and an MBA from Harvard Business School. He began his career in the investment industry in 2015.

John Zhao

Mr. Zhao is an emerging markets industry analyst with Boston Partners specializing in the emerging markets technology sector of the equity market. He joined the firm in November 2021. Prior to his role at Boston Partners, Mr. Zhao worked as a Private Equity Associate in Salt Lake City and an Investment Banking Associate in Hong Kong.

Jack Birmingham

Product Specialist

Mr. Birmingham holds a B.A. degree in political science from Hobart College. He began his career in the industry in 2018.

Jack Birmingham

Mr. Birmingham is Product Specialist for the Boston Partners value equity strategies based in the Boston office, responsible for clients, consultants and prospects outside of North America. Prior to this role, he joined the firm in June 2018 as an RFP Writer and Database Coordinator in the Marketing Department, where he supported all of the firm’s equity strategies.

Sam Lieberman

Client Advisor

Mr. Lieberman holds a B.S. degree from Northeastern University and the FINRA series 7, 22, 63 and 65 licenses. He began his career in the industry in 1989.

Mr. Lieberman is a Client Advisor at Boston Partners. In this capacity, he is responsible for delivering Boston Partners investment solutions to premier financial advisors at the major wealth management firms. Prior to joining the firm in 2024, Mr. Lieberman held similar roles at Angel Oak Capital and Putnam Investments.

Jason Reid

Senior Compliance Manager

Jason holds a B.S. degree from Fitchburg State University as well. He began his career in the industry in 2004.

Jason Reid

Mr. Reid is a Senior Compliance Manager for Boston Partners and Chief Compliance Officer of Boston Partners Securities, LLC, our limited purpose Broker/Dealer. He joined the firm in August 2022. His primary responsibilities are Sales and Marketing Compliance, and Broker/Dealer regula-tory oversight. He is a member of the GIPS Committee and the Governance Committee. Previously, Mr. Reid was a member of the Boston Partners Sustainability and Engagement team where he managed the proxy voting process on behalf of the Governance Committee, pre-pared all engagement materials with issuers regarding proxy matters and did original ESG research on issuers held in Boston Partners’ portfolio. Prior to joining Boston Partners, he was a Compliance Manager, Assistant Vice President, at Natixis Investment Managers. He holds the series 7, 24 registrations and has successfully passed the Chief Compliance Officers Qualifying Examination.

Newcomb Cole

Consultant Relations Director

Mr. Cole holds a B.S. degree in finance from Syracuse University. He also holds the FINRA Series 7 and 63 licenses and began his career in the industry in 1990.

Newcomb Cole

Mr. Cole is a Consultant Relations Director, with distribution and relationship management responsibilities for consultants and investors in North America. He joined the firm in January 2023 from Intech, where he was a member of the consultant relations team. Prior to this, Newcomb was in a similar role at The Boston Company.

Kathryn Y. Burke

Head of Client Service

Ms. Burke holds a M.A. in East Asian Studies from Duke University and a B.A. degree in Asian Studies from Dartmouth College. Ms. Burke holds FINRA licenses 7 and 63. She has seventeen years of industry experience.

Kathryn Y. Burke

Ms. Burke is the Head of Client Service for Boston Partners. In this role she has management responsibility for the firm’s client service associates and proposal team helping to ensure the client’s needs are met with world class service and satisfaction while driving new business initiatives to develop and enhance relationships in our Institutional and Sub advisory businesses. She joined the firm in February of 2023. Prior to that, Ms. Burke spent fifteen years at Putnam Investments as Director of Client Service managing day-to-day oversight of their Japanese and North American clients, and before that, two years as an Account Executive and Proposal Writer at Fidelity Investments in their institutional division.

Timothy Strakosch

Investor Relations

Mr. Strakosch holds a B.A. degree in finance from the Carroll School of Management at Boston College and holds the FINRA securities licenses 7 and 63. He began his career in the industry in 2013.

Mr. Strakosch is responsible for business development and relationship management of the firm’s Public Fund and Taft-Hartley clients. He joined the firm in 2023 from AllianceBernstein where he was a vice president in the Institutional Client Group with responsibility for Public Fund and Taft-Hartley clients throughout North America. Previously, he was at Putnam Investments responsible for marketing Putnam Investment solutions to Financial Advisors at the wire house firms. Mr. Strakosch is a member of the Leadership Advisory Council at The Cristo Rey Boston High School and a team captain for the Pan-Mass Challenge. He serves on the Gold Leadership Council at Boston College and is a Class Agent at The Belmont Hill School.

Connor Watson, CFA

Relationship Manager

Mr. Watson earned a B.A. degree in economics from the College of the Holy Cross. He holds FINRA Series 3, 7, and 63 licenses, and the Chartered Financial Analyst® designation. He began his career in the industry in 2012.

Mr. Watson is responsible for relationship management and business development for the firm’s Public Fund and Taft-Hartley clients across the U.S. He joined Boston Partners after nine years at BNY Mellon Investment Management where he was a Vice President in the North American Distribution group with responsibility for multi-employer, public and other clients. In prior roles, Mr. Watson was with The Boston Company Asset Management as a Client Service Analyst, and he started his career at State Street Global Services.

Jacqueline Kelliher

Relationship Manager

Ms. Kelliher holds a B.S. in business administration from the University of Richmond and is currently pursuing an M.B.A. at Babson College. She holds the FINRA Series 7, 24, 63, and 66 licenses and began her career in the industry in 2014.

Ms. Kelliher is a member of the Investor Relations team and joined the firm in March 2023. In this capacity, Ms. Kelliher has business development and relationship management responsibilities of the firm’s financial intermediary relationships. Prior to this, Ms. Kelliher was a Director of Platform Distribution at John Hancock Investment Management. In this role she supported the Investment Research and Due Diligence efforts of the gatekeeper and professional buyer clientele within broker-dealer platforms and financial institutions. Additionally, she managed a team of internal sales professionals supporting the Broker-Dealer/Platform and DCIO channels. Before that, Ms. Kelliher held various sales roles across channels including RIAs, Family Offices, and Bank/Trusts.

Jett Dziama

Equity Analyst

Mr. Dziama holds a B.S. degree in business administration with a concentration in finance and a minor in economics from Boston University. Mr. Dziama began his career in the investment industry in 2023.

Mr. Dziama is an equity analyst with Boston Partners. Mr. Dziama is focusing his analytical efforts on banks and the financial services sector of the equity market. He joined Boston Partners in August 2023.

Stephen Ferrara

Equity Trader

Mr. Ferrara holds a B.S. degree in business management from Suffolk University. He began his career in the investment industry in 2014.

Mr. Ferrara is an equity trader for Boston Partners. Prior to joining the firm in June 2023, he held the position of senior trader at Man Group.

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