Russia’s invasion of Ukraine sent shockwaves across the world, creating a tragic humanitarian and geopolitical crisis, and introducing new uncertainty to the global economy and financial markets. Investors also continue to grapple with ongoing inflationary risks, central bank policy changes, and COVID-19 developments.
Most global assets experienced broad-based declines in January. Global equities suffered their worst month since March 2020; emerging markets held up better than developed counterparts but remain a significant laggard over the trailing 12-month period. Value and large caps outperformed growth and small-cap equivalents, respectively. Fixed income assets declined as nominal interest rates rose and…
While bitcoin and gold share some qualities, these two assets are different and should not be viewed as interchangeable in investment portfolios.
The global economy continued its road to recovery in 2021, as the most severe economic impacts of the COVID-19 pandemic gradually receded. There were fresh waves of infection during the year, but the public health actions taken to counter them were less economically damaging. In the meantime, fiscal and monetary policy remained at extremely accommodative levels, supporting strong risk-asset performance.
Risk assets surged in fourth quarter, capping off a year of impressive gains.
The US dollar tends to appreciate during two broad economic regimes. One is when the US economy is materially outperforming its global counterparts, attracting capital looking to benefit from the superior US prospects. The other is when growth slows sharply, attracting safe-haven-seeking capital. This is the “dollar smile” model of the currency, and looking at 2022 through this lens suggests some dollar strength may be in store.
Digital assets saw considerable inflows in recent years as investors searched for alternative sources of return amid excessive equity and bond valuations. We expect this momentum will continue next year as regulators increasingly approve easy-to-access cryptocurrency exchange-traded funds (ETFs). Still, global regulatory challenges persist, and cryptoassets will remain highly volatile until there is more clarity on future regulation.
Risk assets sold off in November as pandemic-related developments introduced new uncertainties to the economic outlook.
Capital markets performance was mixed in third quarter, with muted gains or losses across many asset classes.
The polarizing and often misunderstood cryptoasset landscape has grown exponentially in recent years. This paper reviews some of the space’s pressing issues, considers cryptoassets in a portfolio setting, and offers some considerations of different implementation options.