While European equity valuations are reasonable from a historical perspective, market pricing doesn’t provide much cover for risks stemming from sovereign finances and the halting economic recovery.
Even as we focus on the investment challenges of the new decade, it is useful to consider the past ten years. This report briefly covers the performance of various asset classes in the 2000s before delving into lessons learned and observations relevant in the years ahead.
While there are some good reasons that demand for fixed income assets has increased, the subsequent price appreciation has made compelling investments harder to find. However, while we view sovereign bonds from many developed countries as very overvalued, our outlook on credit is more nuanced.
The importance of geographic revenue mix has increased in recent years as growth prospects for emerging and developed markets have diverged. For European and U.S. companies positioned to capitalize on this growth, it may provide a silver lining despite slowing domestic demand.
This primer revisits the widely misunderstood practice of short selling, considers the associated risks, and addresses the role of dedicated short sellers in a broad investment portfolio.
Natural resources equities offer reasonable values today, and some shelter during future inflationary periods.
While property prices have soared over the past year, future returns are likely to be tepid, with gains capped by the huge debt overhang and limited lender capacity, but supported by the accommodative monetary environment.
This paper provides an introduction to hedge fund strategies and operations. Topics covered include common investment strategies, capacity, investor base, legal and fee structures, liquidity provisions, staffing, external service providers, and fund documents.
While there are few options to effectively hedge against a US$ crash, investors should nevertheless think carefully about the ways such an event might play out, and what this implies for the efficacy of current investment strategies.
Authorities have taken decisive steps recently to quell concerns about sovereign debts. However, the underlying problems will take a long time to work through and thus volatility is likely to be a recurring theme in European markets for some time.