Rising from the Ashes: Key Developments Since the Global Financial Crisis
In this report, we briefly highlight five key post-GFC developments and discuss how investors might adapt their portfolios to these changes.
Equities
In Light of Ongoing “Brexit” Uncertainty, Should Investors Reduce Exposure to UK Equities?
No, investors should consider staying the course. Though developments and headlines associated with the United Kingdom’s Article 50 negotiations with the European Union have been and likely will remain fitful, they reflect more the political nature of the process and less the underlying fundamentals of the economy and its listed equities.
Bear Market Indicators: Where Are We in the US Cycle?
Though it is getting late in the cycle, there is nothing to indicate a recession is imminent; however, maintaining appropriate levels of diversification and liquidity to meet cash requirements during periods of stress is becoming increasingly important.
US Manager Universe Statistics: Second Quarter 2018
This chart book presents representative long-only and hedge fund manager performance for second quarter 2018. The median US Small-Cap Growth manager posted the highest median return for both second quarter 2018 (8.7%) and the one-year period ending June 30, 2018 (25.4%). The median Emerging and Frontier Markets Equity manager posted the lowest median return for second quarter 2018, returning -8.6%, and the median Emerging Markets Debt manager suffered the worst performance for the one-year period ending June 30, 2018 (-1.6%).
Review of Market Performance: Fiscal Year 2018
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.
Should Investors Boost Their Exposure to US Small Caps, in Light of Recent Economic Policy and Geopolitical Developments?
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.
Will the Addition of Chinese A-Shares to MSCI’s Global Indexes Trigger an A-Share Rally?
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.
US Manager Universe Statistics: First Quarter 2018
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%).
Should Investors Reposition their Portfolios in Response to Recent Tariffs and the Rising Threat of Trade Wars?
Investors with thoughtfully diversified portfolios, which incorporate sufficient liquidity, should stay the course amid today’s trade tensions.
Abenomics and Japanese Equities: A Promising Outlook, But Risks Remain
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.