The US Federal Reserve cut its policy rate by 50 basis points today, highlighting the serious challenges facing the global economy. Still, we don’t believe investors should cut risk. Very few have an informational edge regarding COVID-19’s market impact, and investors could be left underexposed when and if markets rebound.
Global equities sold off sharply this week as cases of COVID-19 spread rapidly outside of China (particularly in Korea, Italy, and the Middle East). While the spike in volatility has been abrupt, the current market sell-off is arguably a needed correction.
Yes, in the near term, but longer term we expect trade, tech, and possibly finances to decouple further.
It has been a challenging time for hedge funds in recent years. Loose monetary policy has driven equity markets upwards and hurt short books. The growth of quantitatively traded funds has eroded some of the inefficiencies commonly exploited by hedge funds. This fact, coupled with the shift toward low-fee passive and alternative risk premia (ARP) products, has raised questions about the merits of hedge funds in investor portfolios. In this paper, we focus on comparing ARP versus hedge funds and investigate whether hedge funds and ARP funds are complementary or whether ARP funds are actually a viable replacement for hedge funds.
The start of a new year and a new decade is an opportune time to reflect on megatrends that will be consequential over the next ten years. In this edition of VantagePoint, we focus on three such trends and their investment implications: disruption, demographics, and decoupling.
We see opportunities to deploy capital in some niche areas of the investment landscape and reshape (or at least re-evaluate) some areas of the portfolio.
Fourth quarter’s edition summarizes articles on FX markets.
Fish, but only if investors can accept very lumpy returns. The SG Trend Index of ten large trend followers (e.g., Commodity Trading Advisors or managed futures strategies) fell more than 4% in both September and October and only matched cash’s return over the past five years.
As sponsors of US single-employer defined benefit plans know all too well, interest rates have experienced dramatic swings in recent years. While many plan sponsors have adapted to this environment by strategically hedging their liability interest rate risk, many are still questioning the efficacy of doing so—especially when interest rates appear to be low. Yet, failing to hedge long-duration liabilities with long-duration assets is a risky endeavor that exposes the plan sponsor to significant downside risk.
Our thoughts on key macro questions, emerging opportunities, and risks in 2020.