Yes, but prepare to average back in as soon as rates approach fair value, and consider moving out to the longer end of the curve. We recommend maintaining neutral allocations to risky assets, but are placing a greater emphasis on diversification given we are at a more advanced stage of the economic and market cycle…
Advice in Brief Comparisons to 2007 are growing. A key distinction today is that policy rates in most developed economies remain near zero. With little inflationary pressure, this cycle could last another several years. This is neither a time to be ramping up nor pulling back risk taking. It is a time for diversification, modest…
VantagePoint is a new quarterly publication from our Chief Investment Strategist summarizing C|A’s total portfolio advice. Advice in Brief Review portfolios to prepare for the prospect of continued tapering and ultimate tightening of monetary policy. Income-oriented assets that benefited the most from quantitative easing are likely to be hurt the worst as monetary policy normalizes,…
EM equity valuations are the key driver of returns over the long term. The benefit from valuation mean reversion should be substantial, as EM equities trade at a 35% discount to DM equities and a 45% discount to U.S. equities, compared to our assumed fair value discount of 10%. We expect EM equities to remain…
Looking ahead to 2014 we are focused on several key themes, among them the evolution of global monetary policy, the likelihood of European equities exceeding diminished expectations, and the headwinds, risks, and opportunities associated with emerging markets equities.
While simple 100% U.S. equity and stock/bond portfolios have outperformed highly diversified portfolios recently, highly diversified portfolios have delivered consistently superior returns over decades.
The most recent step in the evolution of portfolio construction practices has been a shift from an asset allocation-centered process to a more comprehensive risk allocation-based process. In this paper, published February 2013, we share our views on why asset allocation has developed into risk allocation and provide an introduction to the Risk Allocation Framework.
Many institutions are reviewing their fixed income exposure in light of concerns over the prospects for rising interest rates. While shortening duration to protect portfolios against higher rates ahead seems intuitively appealing, experience indicates it is ill-founded.
In April 2009 a group of U.S. colleges and universities, museums and libraries, independent schools, and other institutions were invited to participate in a brief survey on spending policy as an update to a similar survey that was conducted in 2008. The survey asked about the policies in place, as well changes that were being…
The financial and economic crisis continues to create a broad and deep range of investment opportunities, many of which remain attractively valued, even after taking the recent rally into account. Given the risk that cheap assets will end up worthless, we emphasize the importance of careful manager selection across the board. Further, we caution that…