2015 All-America Research Team: Equity-Linked Strategies, No. 1: Marko Kolanovic & team

Marko Kolanovic & team

J.P. Morgan

First-Place Appearances: 4

Total Appearances: 12

Team Debut: 1999

Marko Kolanovicand his J.P. Morgan squad claim first-place honors for a fourth consecutive year, thanks largely to their innovative coverage. “They’re always coming up with new ways to look at data,” observes one client who considers the group’s “Flows and Liquidity” essential reading. Specifically, another supporter says, “Marko has done very interesting work on oil prices and equities. He’s about the best at this that I have ever seen.” Kolanovic, 40, and his colleagues are advising that the risks for U.S. equities going into the year’s end are substantial and include a potential increase in domestic interest rates, the strengthening dollar, turmoil in emerging markets and further weakening in China. In this environment, they recommend that investors hedge the S&P 500 portfolio. “Equity index hedges are currently inexpensive,” the team leader explains, adding that S&P 500 index options “appear cheap relative to credit spreads, and they also look cheap relative to stock options.” At the same time, skew — based on the price of out-of-the-money options on the benchmark — is “relatively high,” he reports, which “indicates a good entry point for an S&P 500 put-spread strategy.” Regarding specific sectors, J.P. Morgan’s crew believes that this is a good time to invest in companies with exposure to an “upside in housing,” says Kolanovic, who serves as global head of the firm’s derivatives and quantitative strategies. Favorable signs for the industry include a pickup in demand, tightening supply, high affordability, modest household leverage, low borrowing rates and relaxed credit standards. “After more than six years into this recovery,” he notes, there are “few opportunities for stronger growth and cheaper valuations than housing and housing-related stocks.”