How Should Investors Alter Portfolios Considering the War in Ukraine?
Thoughtfully, if at all. At this stage most investors should examine portfolio risks related to the war and monitor market developments.
Authored by: Kevin Rosenbaum
Global Equity Performance Exceeds That of High-Quality Bonds
Global equities have returned more to investors than high-quality global bonds in nearly three quarters of the last 30 years. The margin of outperformance during those years has been considerable, averaging 12.5 percentage points. That high historical success rate, along with our view that healthy economic activity will support both positive earnings growth and risk appetite, leads us to expect that equities will yet again outperform high-quality bonds.
The Rise in Inflation: A Look at the Dynamics at Play
This chartbook reviews the dynamics at play and includes global commentary on the recent inflation rate spike.
US Inflation Spikes, as Expected
Today, the US Bureau of Labor Statistics released its monthly inflation report for April, which highlighted that prices paid by urban consumers for a basket of goods and services increased by 4.2% relative to the same month last year.
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.
Will Virus-Linked Risks Overwhelm Small-Cap Equities?
No, we’re optimistic about this diverse collection of companies, and we think investors without dedicated allocations should establish toe-hold positions in developed markets (DM) small-cap equities funded from DM mid- to large-cap peers.
US Unemployment Rate Reflects Economic Toll of COVID-19
The US economy lost a staggering 20.5 million jobs in April, in the worst plunge in payrolls since the Great Depression, according to data released by the US Bureau of Labor Statistics this morning.
VantagePoint: Is It Time to Overweight Equities?
In periods of market stress, it can be difficult to rebalance, much less overweight risky assets like equities. In this paper, we review our approach using multiple lenses: magnitude and duration of drawdowns relative to history, cheapness of valuations, and presence of pre-conditions for markets to begin their ascent. Such an approach can help investors tune out the emotion and dial in on the hard data and most probable outcomes even in the face of great uncertainty. While opportunities are developing across many markets, investors should hold off on broad overweights to risky assets at this time.
The Complex Relationship Between Inflation and Asset Prices
As we write in March 2020, COVID-19 is spreading across much of the world, undercutting economic activity. While we are unsure of how this situation will unfold, we have long believed that the best way to guard against future uncertainty is to have a well-constructed portfolio. One key component in that is understanding the relationship between asset prices and inflation.