What Long-Term Investment Implications Should Investors Be Monitoring Related to the War in Ukraine?
Investors should be patient and thoughtful in implementing any changes to portfolios.
Authored by: Celia Dallas
VantagePoint: Jumpstarting the Energy Transition
This year may prove to be pivotal in the transition from fossil fuels to renewables. Policy makers, businesses, and investors are accelerating commitments to bring greenhouse gas emissions to net zero by 2050, while technological advances and economics in sectors, like renewable energy and EVs, are reaching more competitive functionality and cost. Even as the energy transition gains speed, we are still in the very early days and anticipate a long and disruptive transition.
China A-Shares Outperform Global Equities
China’s equity markets have lagged global equities sharply thus far in 2021 in the face of a regulatory crackdown. We expect Chinese equities, particularly China onshore A-shares, to outperform global equities in 2022.
VantagePoint: China – Reassessing Risks and Opportunities
As the second largest economy in the world, China remains an important destination for global investor capital. Yet, the pace and scope of China’s regulatory crackdown are causing concern. In this edition of VantagePoint, we review the nature of regulatory developments and their impact on the investment opportunity set. We believe that dedicated, strategic allocations to Chinese assets are still warranted. Investors should carefully consider their sector exposure and evaluate managers’ capabilities in the current regulatory and geopolitical environment.
Can Value Stocks Continue to Outperform the Broad Market?
Yes, we believe value stocks can resume their leadership relative to the broad market over the next six to 12 months, provided we are correct in our assessment that the economic impact of COVID-19 Delta variant will be limited in major developed markets and China.
VantagePoint: Can Value Outperformance Endure?
In this edition of VantagePoint, we explore the historical drivers of the value risk premium to determine if there have been any fundamental changes since 2007, the start of the global financial crisis, and to understand conditions that must be present for a sustained period of value outperformance.
VantagePoint: Reflation, Inflation, or More of the Same?
In this edition of VantagePoint, we review the drivers of inflation globally and conclude that widespread inflation concerns are likely overdone. For investors concerned about the risks of inflation, we refresh our analysis on the complex relationship between asset classes and inflation and dig deeper into the implications of higher inflation on equities.
VantagePoint: Modern Portfolio Diversification
Investors are facing a challenging period for earning what they spend and achieving adequate portfolio diversification. With most DM sovereign bond yields near or below zero, expected returns for bonds are at all-time lows and diversification qualities are constrained. In this edition of VantagePoint, we evaluate defense and diversification options to identify a modern approach to diversification in this low-yield era.
Outlook 2021: A Year of Healing
As 2020 comes to a close, we expect some key investment drivers to persist into next year. While our views speak to many different challenges confronting investors, including the poor bond yields on offer, the fate of US-China relations, and where to find growth, they are rooted in the belief that 2021 will be a year of healing for the global economy.
VantagePoint: Investment Opportunities Six Months Into the Pandemic
Economic, market, and healthcare circumstances have been extraordinary over the last six months. However, attractive opportunities exist. We see appeal in tech and tech-enabled businesses but remain cautious on elevated pricing. There’s enough value in relatively cheap segments of public equities to justify taking measured, diversified overweights. We are broadly cautious on credit, but see pockets of opportunity in some segments less supported by central bank activity. Finally, the importance of investing in social equity and diversity has been brought into sharp relief by this crisis.