October’s publication summarizes three articles related to the Federal Reserve. The first argues that the Fed’s decision to reduce the size of its balance sheet will have a limited impact on global government bond yields; the second argues global liquidity will remain abundant in the next few years, despite the Fed’s tightening; and the third discusses mysteries that remain from the unprecedented era of quantitative easing.
We would not seek to position portfolios specifically for tax reform as markets have already priced in some improvement in earnings from tax cuts, and the winners and losers from the proposed tax changes will not be clear until more details are provided. Global cyclical and value stocks offer better risk/reward prospects as they should benefit if tax reforms are passed, but are not reliant on such an outcome.
This quarter’s edition covers key risks to continued economic expansion, including monetary policy and inflation expectations. Also discussed are whether investors are being compensated for taking risk and different strategies for geopolitical risks.
As pressures on pensions mount, we believe financial executives are best served by re-evaluating major decisions in terms of the true tools at their disposal. In this paper we review four levers that are fundamental drivers of pension costs and outcomes: asset returns, liability hedging, contribution policy, and benefit management. Balancing these levers is critical to enabling greater probability of success in managing pension risk, and we introduce a framework for chief financial officers and other financial executives to use in doing so.
Three years ago, we concluded that benchmark ten-year Treasury yields would top out in a 3.5%–4.0% range in the next monetary tightening cycle. Now that the next rate hike cycle is well underway, we revisit our analysis, finding that our original assessment remains the most probable conclusion. In fact, the low end of that ceiling appears the more likely outcome today, with one important caveat: the potential for an inflationary dynamic that surprises.
September’s publication summarizes three articles related to market sentiment. The first highlights how news articles can be used to predict future market returns; the second argues that when sentiment across markets becomes more correlated future returns are likely to be more correlated as well; and the third argues that sentiment is an integral part of asset pricing.
Policy benchmarking is a critical component of building and managing a successful investment program. In this paper we set out our comprehensive benchmarking framework and then zero in on the policy benchmark as the primary reference point for evaluating investment decisions.
VantagePoint is a quarterly publication from our Chief Investment Strategist summarizing CA’s total portfolio advice.
How much faith can investors put in the signs given by various “predictive” indicators? In this brief, we look at five indicators that have been in vogue in recent years, and review their track record.
May’s publication summarizes three articles on factor-based investment strategies. The first demonstrates the difference between theoretical factor returns and the factor returns realized by mutual fund managers, the second examines the robustness and implementation costs of multiple factors, and the third finds that factor timing strategies fail to add value to a diversified multi-factor portfolio.