The prospect of higher interest rates has contributed to recent equity market volatility and provided a wake-up call for investors underweight some traditional value sectors. What may surprise some investors is that even managers that style themselves as value-oriented may be underweight bellwether value sectors. Now is a good time to sharpen your pencil on value manager exposures.
The 2021 UK edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Investors should be patient and thoughtful in implementing any changes to portfolios.
The Pension Risk Transfer (PRT) market has grown markedly over the past decade as recent regulatory changes, coupled with greater pricing competition from insurers, have increased the popularity of PRTs. However, for many plan sponsors, PRTs are not the best solution. Plan sponsors should fully understand the potential impact of a risk transfer transaction on their plan, specifically as it relates to three dimensions explored in this paper: funded status, risk reduction, and future costs. Without this understanding, the hidden cost of these transactions may go unnoticed.
Government bonds have sold off to start the year as central banks tighten policy in response to inflation pressures. The rise in yields this year may meet some resistance in the near-term, but likely has more room to run given the economic backdrop and policy trajectory. Of course, the war in Ukraine and its impact on the economy will be a key driver of rates for the duration of the conflict.
The 2021 US edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Thoughtfully, if at all. At this stage most investors should examine portfolio risks related to the war and monitor market developments.
Our annual report based on a survey administered to our endowment clients summarizes returns, asset allocation, and other investment-related data for 307 institutions for the fiscal year ended June 30, 2021. We also review peer data on topics such as investment policy, portfolio manager structures, spending, and investment office staffing and governance.
Global equities tend to sell off following major geopolitical events, but such declines have historically been mild and short-lived, far below the 20% drawdown threshold that is typically considered a bear market.
No. The inflation attributed to green initiatives (known as “greenflation”) is part of the current inflation narrative, but we doubt concerns related to it will derail the global energy transition.