No. We continue to advise small overweights to Asia ex Japan or emerging Asia relative to US equities, but would not suggest investors add more substantial overweights unless they have an exceptionally long time horizon and the ability to tolerate substantial volatility. The risks to emerging markets are well known. Commodity weakness, a slowdown in…
Investors should be wary of modifying their bond exposures solely based on what they think interest rates might do, and focus instead on bonds’ role in the portfolio and on mitigating risk/return asymmetry at current yields.
Advice in Brief The consensus view that a global recession is not imminent seems reasonable, but the possibility cannot be ruled out. This keeps us looking for bargains, but leaving the bar high, as most assets are not cheap and what is cheap is generally cyclically oriented. Asian emerging markets or Asia ex Japan equities…
The answer depends on what kind of investor you are.
The situations in China and Greece, not to mention Puerto Rico’s debt woes, serve as a poignant reminder not to be complacent. Investors should take care that portfolios are well constructed, diversified, and consistent with their ability to absorb downside risks while meeting long-term return objectives. With risks rising in some areas, and few bargains…
This edition of VantagePoint reviews the potential for contagion from Greece, concluding that the ECB appears to have adequate ammunition to manage through current conditions, but longer-term political risks remain. We consider recent activity in Chinese equity markets and conclude that offshore Chinese H-shares offer more appeal than onshore A-shares, where upside potential is limited as highly leveraged investors seek to reduce exposure by selling into rallies. We examine the prospects for a sustained reversal of major trends that have persisted since last year, concluding that reversals appear unlikely for now.
Advice in Brief We generally remain neutral on risky assets, but are becoming more cautious and selective as the market cycle advances and the US Federal Reserve looks to begin raising rates. We maintain our advice that investors shift more capital into safer assets as equity markets become more expensive. Volatility has been rising in…
We continue to believe US$-based investors should hedge a portion of non-US$ currency exposure, particularly that associated with tactical positions in non-US$ assets.* Strategic hedging to mitigate currency volatility may also be appropriate for investors with large allocations (e.g., 20%–25% or higher) to foreign currencies.** We maintain this recommendation even as we regard the US…
VantagePoint is a quarterly publication from our Chief Investment Strategist summarizing C|A’s total portfolio advice. Advice in Brief We have been recommending since the middle of last year that investors shift more capital into safer assets—more fundamentally driven hedge funds and Treasuries—as equity markets become more expensive, even as we remain neutral on equities on…
No, the fall is a net benefit. Falling commodity prices create more divergent emerging markets conditions, generally benefitting net commodity consumers at the expense of net commodity producers. Among emerging markets, net commodity importers are largely Asian, while exporters are more concentrated in Europe, Latin America, South Africa, and the Middle East. Historical relationships between…