This content is from: Research

The 2014 All-America Research Team: Equity-Linked Strategies, No. 1: Marko Kolanovic & team

< The 2014 All-America Research TeamMarko Kolanovic & teamJ.P. MorganFirst-Place Appearances: 3

Total Appearances: 11

Team Debut: 1999

In first place on this roster for a third year running is the J.P. Morgan squad of five U.S.-based analysts under the direction of Marko Kolanovic, 39. Working with 25 colleagues globally, the strategists “are the best in terms of giving me quick, detailed summaries,” remarks one hedge fund manager, who emphasizes that, indeed, “they’re the quickest and most comprehensive. That says it all.” Through the balance of 2014, Kolanovic’s group expects turbulence to increase, principally as a result of the U.S. Federal Reserve’s winding down of its third round of monetary stimulus. Further, says the team leader, a slowdown in Europe and globally poses “significant geopolitical risk” and has the potential to compound volatility in U.S. markets. He and his colleagues foresee additional headwinds from a likely reduction in corporate stock buybacks and hedge funds’ potential decreasing of their exposure to equities, which is near a record-high level. They are recommending that investors reduce their equities-related risks using calls on the Chicago Board Options Exchange Market Volatility Index together with puts on S&P 500 index. Another tactic Kolanovic’s crew touts is trading out of equities and into long-dated S&P 500 call options, which “may be cheap due to low interest rates and low levels of long-term implied volatility,” he reports. Finally, the J.P. Morgan researchers also advise clients to pursue S&P 500 “risk reversals,” he says, “buying closer to the money call and selling out of the money put, [which] makes sense due to the relatively steep skew.”

Related Content