Though the risk from rising rates is potentially higher in Australia than elsewhere given household debt levels and the state of the housing market, we judge the risks and outlook as balanced and advise investors to remain neutral on equities and risk.
The risks from rising rates are potentially higher in New Zealand than elsewhere given the overvaluation of equities and the housing market. We advise investors to underweight NZ equities, fixed income in general, and the NZ dollar.
This chart book presents representative long-only and hedge fund manager performance for fourth quarter 2017. The median US Growth Equity ex Small-Cap manager posted the highest median return for fourth quarter 2017, returning 6.8%. Emerging & Frontier Markets Equity managers posted the best returns for the one-year period ending December 31, 2017, with a median return of 36.8%. The median US Intermediate-Term Bonds manager posted the lowest median return for fourth quarter 2017 (0.0%), while the median Cash Management return was lowest for the one-year period ending December 31, 2017 (1.1%).
Equity markets dazzled investors in 2017, as an uptick in global economic activity helped lift expectations for corporate earnings growth across developed and emerging markets. The performance of equities and other asset classes are reviewed in this chart book.
In our 2018 outlook, we review the prospects for several asset classes—developed and emerging markets equities, credit, real assets, sovereign bonds, and currencies—and share the advice of our chief investment strategist.
This chart book presents representative long-only and hedge fund manager performance for third quarter 2017. The median Global ex US Small-Cap Equity manager posted the highest median return for both third quarter 2017 and the one-year period ending September 30, 2017, returning 8.6% and 23.6% for the respective periods. The median Cash Management manager posted the lowest median return for third quarter 2017 (0.3%), while the US REITs median return was lowest for the one-year period ending September 30, 2017 (0.4%).
China has recently opened its domestic bond market to foreign investors. At first glance this is a huge opportunity for investors. However, as with many things in China, the story is more complicated than it appears.
Another outbreak of Eurozone distress is not our base case, but more risk-averse investors should understand their options.
Though insurance-linked investment is not for everyone, 2017 is giving investors valuable additional insight on which strategies and managers are equipped to deliver the diversification and yield benefits this asset class provides.
Commercial real estate lending funds represent an opportunity for investors worried about real estate valuations to move up the capital stack yet still earn an attractive return.