Category: Investing

After the market closes on Friday, September 28, S&P Dow Jones Indices and MSCI will implement structural changes to the Global Industry Classification Standard (GICS)—the classification standard they use to categorize companies by sector, industry, and sub-industry within their market indices. Only 3 of the 11 GICS sectors will be affected, but changes to those 3 will be significant. It’s important for equity investors—especially those who use index-tracking strategies—to learn what’s changing and understand the impact of the changes on key characteristics of these sectors.

This is the final article in our series exploring five areas that have been experiencing tremendous growth through strong technological innovation or by leveraging advances in the internet. We refer to these five areas as SCODI, which stands for:

• Software as a Service (SaaS)
• Cloud
• Online retail
• Digital payments
• Internet of Things (IoT)

With contributions from Daniel Sarnowski, Portfolio Specialist, WFAM Global Fixed Income

We are now in a period of rising interest rates, and investors may wonder how municipal bonds have fared in past periods of rising rates and if they have a place within an asset allocation plan today. The answer is that, historically, municipal bonds have performed well when interest rates are increasing.

Our previous article—the first in a three-part series—provided overviews of five areas that have been experiencing tremendous growth through strong technological innovation or by leveraging advances in the internet and discussed each area’s key growth catalysts. We refer to these five areas as SCODI, which stands for:

• Software as a Service (SaaS)
• Cloud
• Online retail
• Digital payments
• Internet of Things (IoT)

The world is racing toward universal connectivity. By 2020, the number of global internet users is projected to reach 4.1 billion, up 1.1 billion (37%) from 2015, and global Internet Protocol networks are expected to support 26.3 billion devices and connections by then—10 billion (61%) more than in 2015, according to Cisco Systems, Inc. With the soaring demand, five innovative areas have experienced tremendous growth that hasn’t yet shown signs of slowing. We refer to these five areas as SCODI.

Key takeaways:

• The recent short-term trend whereby stock prices have not initially responded as favorably to earnings surprises is likely temporary. If a company’s share price doesn’t react to a positive earnings surprise and good guidance, that could be an indication that the stock is underappreciated and undervalued.

Peter Donisanu is an Investment Strategy Analyst at Wells Fargo Investment Institute, and Dr. Brian Jacobsen is a Senior Investment Strategist on the Multi-Asset Solutions Team of Wells Fargo Asset Management.