In this edition of Asia Insights, we highlight areas in public equities, private investments, real assets, and hedge funds where we continue to find opportunities, despite the current environment of higher rates and market uncertainty.
Risk assets continued to rebound in first quarter, led by global equities, which have gained 15% since their recent trough last October.
The 2022 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.
Yes. Aggressive central bank tightening has caused economic growth to slow in Europe and the United States, and we expect that the recent banking sector stress will further weaken economic growth. Now is the time for investors to tactically overweight quality equities, given this style has tended to outperform broad equities during periods of economic contraction.
No. We continue to think investors should tightly manage risk by keeping equity allocations and bond duration in line with broad policy targets and resist the temptation to time the market.
The 2022 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.
New Zealand markets had difficulty gaining ground in 2022, although they still demonstrated greater resilience than many of their global counterparts. For 2023, the weakening outlook for domestic growth and the prospect of more restrictive interest rates remain key risks to New Zealand market performance.
No, while the recent outperformance and positivity surrounding Eurozone equities was justified by shifts in the macroeconomic landscape, we do not have confidence that outperformance will continue, given the challenges still facing the region. Therefore, we suggest investors keep Eurozone equity allocations in line with policy weights.
Risk assets broadly declined in February, reversing some of the rally from the last several months.
In this edition of VantagePoint, we explore the improvement in economic conditions, prospects for recession in the United States and Europe, the degree to which markets are pricing in reasonable economic and earnings prospects, and sensible asset allocation considerations.