What Can Investors Expect for 2017?
The surest call to make for 2017 is that higher growth expectations will be paired with the distinct possibility of negative outcomes, putting a premium on diversification and liquidity management.
Investment Planning
Outlook 2017: A Break in the Clouds
Change is in the air and the prospect for a bit of sunshine to break through the overhang of slow growth and lower-for-longer yields is palpable. Of course, the sun doesn’t shine forever, and overall our views are little changed. The things we have been worried about for some time—high valuations for certain risk assets, record-low interest rates, slow economic growth—have not gone away. The surest call to make for 2017 is that higher growth expectations will be paired with the distinct possibility of negative outcomes, putting a premium on diversification and liquidity management.
Investment Publications Highlights: November 2016
November’s publication summarizes two articles and one speech related to climate change. The first highlights how a decarbonized index could outperform its benchmark; the second suggests that too rapid a transition to a low-carbon economy poses a risk to financial stability, just as climate change itself does; and the third argues that all investors should consider climate risks when making investment decisions.
Should Investors Be Concerned About Rising Geopolitical Tensions?
Yes, but positioning for such risks is challenging as timing and specific circumstances are uncertain. Investors should rely on their usual lines of defense: portfolio diversification and liquidity provisioning.
VantagePoint: Fourth Quarter 2016
Advice in Brief Bond yields have reached extreme levels this year amid soft growth, continued central bank purchases, and negative interest rate policies, dragging down prospective returns for a variety of asset classes. Capital markets are unlikely to deliver most investors’ long-term return objectives over the next five to ten years. In such an environment,…
The Consequences of Negative Interest Rates
Low rates have distorted markets and generated unintended problems for investors and lenders. Central bankers are increasingly aware of these consequences and are slowly moving to press the pause button. It will take even more courage for them to begin to reverse the unprecedented interventions in bond and other markets.
The Opening of China: An Update for Investors
Despite its economic size, China remains under-represented in global investment benchmarks. Recently announced reforms have the potential to improve investor access and increase China’s weight in global benchmarks.
Investment Publications Highlights: September 2016
September’s publication summarizes three articles related to the impact of US presidential elections on markets. The first reviews how individual investors’ portfolio allocations change depending on the party elected, the second argues that market volatility increases as voters become less uncertain about the eventual election winner, and the third examines the prospects for fiscal policy in different election outcomes.
Given Today’s Investment and Macroeconomic Environment, Is it Appropriate to Meaningfully De-Risk Portfolios?
In this edition of CA Answers, two members of our Global Investment Research team share their differing perspectives on whether investors should temporarily de-risk portfolios today. Sean McLaughlin argues that diversified portfolios incorporate shock absorbers already, and that temporarily boosting tilts to defensive assets is likely to be counter-productive. Eric Winig agrees that market timing…
Don’t Forget the Credit Spread!
While corporate plan sponsors are keenly aware of interest rate risk within their defined benefit plans, few fully appreciate the complex and significant risk posed by credit spreads.