Asia ex Japan – Exit the Rabbit, Enter the Dragon
Although valuations are reasonable, macro risks remain substantial. For now, investors should be neutral and seek to build overweight positions on weakness.
Research Publications Archive
2012 – More of the Same
This commentary briefly discusses market activity in 2011, assesses both long-term structural headwinds for markets and particular risks for 2012, and provides our outlook for the year. It also examines where we could be wrong, and reviews our asset class outlooks based on current valuations. Overall, our investment advice is to stay defensive, seek greater…
Harvesting Ripe Fruit From a Frost-Covered Tree
The U.S. economy is still on life support, but investors should not assume that equities and credit are dead money.
Australia – Hang on for the Ride
We are neutral on Australian equities and bonds, but still a bit nervous about the Australian dollar. While Australia faces some homegrown challenges, most of the risks emanate from offshore. We see a balance of potential upside—and downside—risks that argue investors should hope for the best, but prepare for the worst and ultimately hang on…
Active Currency as an Asset Class: Is Currency the New Long Volatility Strategy
As modern portfolios evolve, investors continue to seek new ways to diversify exposures and mitigate volatility. Currency exposure, once thought of exclusively as a risk to be hedged away, is today being embraced by some in mandates designed to generate returns. The form of such a mandate may vary widely, from a discrete, active strategy,…
Global Macro: The Largest Canvas in the Industry
This paper discusses what global macro is and how its practitioners operate, reviews its history and performance, and discusses its major attractions and key risks. We believe a thoughtfully constructed allocation to select global macro managers offers various potential benefits to investors, particularly in an increasingly macro-driven environment.
Japan – The Long Road to Recovery
We continue to be neutral on Japan despite low valuations, as the catalyst for outperformance remains elusive.
Emerging Markets Equities: Balancing Fire and Ice
While emerging markets equities remain attractive in the long term, the short-term risks posed by the European debt crisis and the potential for a global recession to pressure earnings growth merit caution. We recommend remaining at policy target allocations and considering building overweights on further weakness.
European Equities: Not Expensive But Not Compelling
European equity valuations are not expensive, but political risks justify a discount and the lack of easy fixes to Europe’s sovereign debt crisis may make volatility a recurring feature of the market.
The Lowdown on Low Vol
While the theory behind low-volatility equity strategies is sound, funds seeking to provide equity-like returns with lowered volatility are neither new nor unique. Further, investors should tread cautiously given the mushrooming number of entrants in the field and the diversity of approaches.