Equity markets and commodity-related assets outperformed other asset classes, while monetary policy expectations continued to negatively impact bond markets during the fiscal year ending June 30, 2018. This brief chart book looks at returns and other market metrics for fiscal year 2018.
We don’t believe so—even though fiscal stimulus, corporate tax cuts, international trade tensions, and US dollar strength all seem to be advantageous for US small caps relative to US large caps.
No, MSCI index inclusion will not trigger a bull market in Chinese A-shares. Given the very modest initial weights and the lack of clarity on future increases, we doubt that index-driven flows will drive share prices meaningfully higher.
This chart book presents representative long-only and hedge fund manager performance for first quarter 2018. The median Global ex US Bonds manager posted the highest median return for first quarter 2018, returning 3.5%. Global ex US Small-Cap Equity managers posted the best returns for the one-year period ending March 31, 2018, with a median return of 26.4%. The median US REITs manager posted the lowest median return for both first quarter 2018 (-6.5%) and for the one-year period ending March 31, 2018 (-1.1%).
Investors with thoughtfully diversified portfolios, which incorporate sufficient liquidity, should stay the course amid today’s trade tensions.
Japan’s long-term economic outlook looks brighter, and the positive structural and governance changes achieved under prime minister Shinzo Abe have improved the opportunity set for long-term institutional equity investors. This progress—paired with improving corporate fundamentals and reasonable valuations—boosts the appeal of Japanese equities. But, several ongoing internal and external risks to the reform agenda and economic outlook require monitoring.
Yes. Inflationary pressures in the United States appear to be building, as positively trending wages, expansionary fiscal policies, and protectionist trade barriers feed into a humming economy. Although we expect these pressures signal an increased risk of an inflation scare, we believe the most likely outcome in 2018 is for inflation to grind only modestly higher.
Despite exceptional overall returns, more than 55% of active emerging markets equity managers underperformed the MSCI Emerging Markets Index gross of fees in 2017, marking the first time since 2009 that the majority have underperformed in back-to-back years. This chart book is our annual summary of the absolute and relative performance of managers that report to our database.
In 2017, the median active global equity manager outperformed the MSCI World Index by 150 basis points (gross of fees), the seventh time in ten years that the median manager outperformed the index. This chart book is our annual summary of the absolute and relative performance of managers that report to our database.
Not in the near term. The current environment of rising, but low, interest rates accompanied by strong earnings growth expectations is supportive for equities.