The Rise in Inflation: A Look at the Dynamics at Play
This chartbook reviews the dynamics at play and includes global commentary on the recent inflation rate spike.
Investment Planning
Is the United States Likely to Enter a Period of Stagflation?
No. While inflation could continue to run hotter than central banks expect, the US employment situation is improving, and economic growth is unlikely to stagnate.
VantagePoint: China – Reassessing Risks and Opportunities
As the second largest economy in the world, China remains an important destination for global investor capital. Yet, the pace and scope of China’s regulatory crackdown are causing concern. In this edition of VantagePoint, we review the nature of regulatory developments and their impact on the investment opportunity set. We believe that dedicated, strategic allocations to Chinese assets are still warranted. Investors should carefully consider their sector exposure and evaluate managers’ capabilities in the current regulatory and geopolitical environment.
Research Digest: Infrastructure Economics
With a large influx in infrastructure investment seemingly around the corner in the United States, the third quarter 2021 edition of Research Digest features three papers on the economic effects of public infrastructure.
Catch My Drift? Active Managers’ Style Tends to Change Over Time
The style bias of actively managed growth and value equity portfolios is not typically static. In this paper, we highlight how the strength of active managers’ style signatures have moved between value and growth and propose a simple fundamental rationale for why this happens.
Can Value Stocks Continue to Outperform the Broad Market?
Yes, we believe value stocks can resume their leadership relative to the broad market over the next six to 12 months, provided we are correct in our assessment that the economic impact of COVID-19 Delta variant will be limited in major developed markets and China.
VantagePoint: Can Value Outperformance Endure?
In this edition of VantagePoint, we explore the historical drivers of the value risk premium to determine if there have been any fundamental changes since 2007, the start of the global financial crisis, and to understand conditions that must be present for a sustained period of value outperformance.
Portfolio Protection: Challenges with Equity Put Options
We advise extreme caution in using derivatives to protect portfolios from sharp equity drawdowns. We recommend that investors look to asset allocation to defend against equity risk before buying puts. For those investors who must pursue a tail-risk hedge, we provide a list of potential pitfalls and solutions, in the form of a case study.
VantagePoint: Reflation, Inflation, or More of the Same?
In this edition of VantagePoint, we review the drivers of inflation globally and conclude that widespread inflation concerns are likely overdone. For investors concerned about the risks of inflation, we refresh our analysis on the complex relationship between asset classes and inflation and dig deeper into the implications of higher inflation on equities.
VantagePoint: Modern Portfolio Diversification
Investors are facing a challenging period for earning what they spend and achieving adequate portfolio diversification. With most DM sovereign bond yields near or below zero, expected returns for bonds are at all-time lows and diversification qualities are constrained. In this edition of VantagePoint, we evaluate defense and diversification options to identify a modern approach to diversification in this low-yield era.