Eager to Question, Patient to Serve.

We constantly challenge our views and continuously evolve our processes in pursuit of new investment ideas and better client outcomes.

CONNECTIVITY 2018: Exploring the White Space

As industries evolve and markets transform, it is essential to reach beyond traditional investment analysis and think about the white space between asset classes, sectors, geographic regions, and investment teams. Our inaugural CONNECTIVITY client conference featuring outside thought leaders explored this white space. Key takeaways included:

Technological Disruption is Here to Stay

A number of technology trends (including artificial intelligence, cybersecurity, and biometrics) will change the face of nearly every industry.

ESG Factors Must Be Integrated with Financial Return Objectives

Companies investing in material environmental, social, and governance (ESG) issues have the potential to experience higher growth in profit margins and superior risk-adjusted stock returns.

New Competitors Are Penetrating Mature Segments

In a range of industries (direct-to-consumer travel being a key example), start-ups are using new marketing approaches to shake up mature market segments, enabling little-known brands to win against well-known leaders.

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36%

Cybersecurity (and data privacy) is the most important ESG topic in 2019 for CONNECTIVITY 2018 attendees. Based on 56 responses, as of October 18, 2018.

The temptation to lead as a chess master, controlling each move of the organization, must give way to an approach as a gardener, enabling rather than directing. A gardening approach to leadership is anything but passive. The leader acts as ‘Eyes-On, Hands-Off’ enabler who creates and maintains an ecosystem in which the organization operates.

General Stanley McChrystal
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Actively Transparent:
MiFID II Update

MiFID II Overview

In response to the European MiFID II Directive, William Blair Investment Management plans to absorb external research costs for clients globally, not just those subject to MiFID II’s research rules. We plan to implement the same treatment for all of our clients as soon as we are able to pay hard dollars for external research across our investment strategies.

Our Objectives
  • Treat all our clients fairly, regardless of location
  • Ensure ongoing access to high-quality external research to deliver strong investment outcomes
  • Enhance transparency with clients, as we continue to serve as a trusted, valued partner

Download PDF: William Blair’s Client Letter

What is MiFID II?
  • MiFID II legislation went into effect in Europe on January 3, 2018
  • It’s designed to offer greater protection for investors and inject more transparency into all asset classes
  • The legislation introduces new rules on trading inducements, remuneration for research, best execution, market transparency, and the regulation of algorithmic trading

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Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and market conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate. William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Investing involves risks, including the possible loss of principal. Equity securities may decline in value due to both real and perceived general market, economic, and industry conditions. The securities of smaller companies may be more volatile and less liquid than securities of larger companies. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit, and inflation risk. Currency transactions are affected by fluctuations in exchange rates; currency exchange rates may fluctuate significantly over short periods of time. Diversification does not ensure against loss. Any investment or strategy mentioned herein may not be suitable for every investor. Past performance is not indicative of future results.

The MSCI ACWI IMI Index is a free float-adjusted, market capitalization-weighted index that captures large, mid, and small cap representation across developed and emerging markets. The MSCI ACWI Small Cap Index is a free float-adjusted, market capitalization-weighted index that captures small cap representation across developed and emerging markets. The MSCI Emerging Markets Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of emerging markets. The MSCI World Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets. The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities and commercial mortgage backed securities. The Russell 2000 Index is a market capitalization-weighted index designed to represent the small cap segment of the U.S. equity universe. Index performance is for illustrative purposes only. The indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly.

Alpha is a measure of an investment's return in excess of the market's return, after both have been adjusted for risk.

Half-life is a statistical measure of the time required for the discrepancy between price and value to contract by half of its starting value. Fundamental value estimates are based on the Dynamic Allocation Strategies team's proprietary research.

P/E Ratio is a measure of valuation which compares share price to earnings per share, calculated using estimates for the next twelve months.

Standard deviation is a statistical measurement of variations from the average.

QUANTITATIVE MODELS—FACTOR DEFINITIONS

The William Blair Earnings Trend Model captures information about short- and medium-term changes in analyst estimates in an attempt to anticipate future estimate changes and stock performance. The score combines measurements of earnings revisions, momentum, and earnings surprise.

The William Blair Valuation Model combines varying metrics used to characterize the relationship between the stock’s trading price and its intrinsic value. By going beyond using only one or two measures, the model attempts to build a more holistic version of a stock’s worth vis-a-vis the market. The score combines measurements of earnings/cash flow based, asset-based, and model-based factors.