Yes, we think corporate earnings expectations are likely too high. This is because earnings are well above the long-term trend, and we expect inflation and higher policy rates will put downward pressure on profits margins.
Risk assets continued their bumpy ride in May as investors attempted to discount a shifting economic narrative. Still, global equities posted only minor declines in local currency terms despite a meaningful increase in volatility. Value topped growth for the fourth time this year, while large caps outperformed small caps. Investment-grade bonds advanced as US Treasury yields mostly fell, whereas European government bond yields continued climbing across maturities. Commodities rose, driven by higher energy prices, while other real assets were mixed. The US dollar and UK sterling weakened, while the euro broadly gained on expectations of tighter monetary policy.
On a median basis, active managers declined but held up better than the MSCI Emerging Markets Index. This chart book is our annual summary of the absolute and relative performance of managers that report to our database.
The vast majority of active managers underperformed the index in 2021—the worst year for active global equities managers we have on record. This chart book is our annual summary of the absolute and relative performance of managers that report to our database.
This chart book is our annual summary of the absolute and relative performance of managers that report to our database.
The ongoing war in Ukraine has exerted a material impact on both global economies and markets, primarily via a steep increase in commodity prices, especially energy. Europe has been particularly affected due to its geographical proximity and the resultant dependence of many of its nations on Russian fossil fuels. This chart book reviews the hit to European growth associated with the war in Ukraine.
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.
Global inflation has been higher and more persistent than most economists anticipated. In this edition of VantagePoint, we evaluate current inflationary and deflationary crosscurrents and the implications for investors. We continue to believe that predicting the future path of inflation is difficult to do well and that the best protection is a well-constructed diversified portfolio designed to meet the asset owner’s risk tolerance, portfolio objectives, and spending needs.
Investors found little respite in April, with most asset classes suffering steep losses.
Continuing the trend seen in second half 2021, global equity markets remained volatile during first quarter 2022, as global indexes declined. Despite the market drawdown, broader indexes mask the relative performance among index constituents. Underlying volatility across sectors was more pronounced. As a result, within long/short equity hedge fund strategies, manager returns had wide dispersion driven primarily by net exposure to growth names and recent IPOs within the technology, healthcare, and consumer sectors.