On a fundamentals basis the medium- and long-term negatives for the pound seem much more numerous than the positives, but sterling could surprise on the upside should real reform and a sustainable economic recovery occur.
Even as the global economy has been showing some nascent signs of recovery, we expect dividend payouts will continue to be pressured as companies globally adapt to a tougher earnings environment.
The U.S. government’s policies to combat the financial and economic crisis appear to have been much more effective in bolstering the financial system and revitalizing capital markets than in stimulating the economy, but capital markets remain fragile and the policies have introduced a number of serious investment-related risks.
Opportunities in the secondary market for non-marketable alternatives appear to have increased substantially, making it a propitious time to create or refine a private equity portfolio by adding/creating exposure to secondaries, especially for those with the scale and resources to buy exposure directly. For those utilizing funds, manager selection will be critical.
While current yields and spreads over government bonds make euro-denominated investment-grade credit a potentially viable option, investors should also recognize that this market may be less attractive than others, such as the US$-denominated corporate sector, which offers higher absolute yields and presents fewer uncertainties.
Investors should move toward benchmark weights in U.K. and European equities based upon good valuations, but the near-term outlook remains problematic given poor economic conditions and earnings that have not yet corrected from cyclical highs.
In a broad and integrated global equity market, realization of portfolio goals increasingly requires investors to adopt both an appropriate global equity investment strategy and a well-thought-out implementation plan that includes decisions regarding portfolio structure. This structure should enable investors to easily dial exposure up or down among sectors, regions, styles, and capitalization sizes. “Global…
Today’s economic environment and current yields and spreads make investment-grade bonds an asset class worthy of consideration, but this would be a tactical bet with potentially significant downside if the exit is poorly timed.
Some Japan managers have or might be expected to migrate to the small-cap sector because it offers good value, but investors that agree with this strategy need to have staying power.
Six years into the commodity boom, and despite increasing risk factors, there remains a strong rationale for a properly conceptualized and managed portfolio allocation to commodities.