The prospect of higher interest rates has contributed to recent equity market volatility and provided a wake-up call for investors underweight some traditional value sectors. What may surprise some investors is that even managers that style themselves as value-oriented may be underweight bellwether value sectors. Now is a good time to sharpen your pencil on value manager exposures.
The 2021 UK edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
The 2021 US edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Thoughtfully, if at all. At this stage most investors should examine portfolio risks related to the war and monitor market developments.
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.
Global equities tend to sell off following major geopolitical events, but such declines have historically been mild and short-lived, far below the 20% drawdown threshold that is typically considered a bear market.
Central banks across the globe are poised to raise policy rates in response to inflation concerns. By examining how US policy rates have impacted US risk assets historically, we consider how assets may react today. These tighter financial conditions may cap the upside potential for risk assets. Within equities and credit, the risks are particularly pronounced in growth stocks and investment-grade corporate bonds.
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.
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
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…