Filtered by Subscriptions: Asset Allocation Use setting Asset Allocation
The S&P 500’s outperformance of many benchmark indices outside the US since the outbreak of coronavirus may not be surprising, given that it was also a salient feature of much of the previous decade. While we wouldn’t be surprised if the outperformance …
17th April 2020
Although energy commodities have substantially underperformed global equities in recent months, we think that the returns from both will be broadly similar over the remainder of 2020 if, as we expect, risky assets in general recover. While risky assets …
8th April 2020
Although real estate investment trusts (REITs) were clobbered during the recent market turmoil, their performance over short periods is often comparable to that of equites, which were also hammered. With this in mind, we expect REITs to stage a sustained …
Although fiscal and monetary support has helped a bit, we doubt that “risky” assets will sustainably outperform “safe” ones again until the global spread of the coronavirus slows, which would raise the prospect of lockdowns ending and economic activity …
3rd April 2020
Given how far they have fallen, we think EM equities in Latin America and EMEA will outperform their Asian peers once the coronavirus comes under control, even if the economic fallout in the former two regions is more severe. This would be similar to what …
1st April 2020
This Focus examines the implications of deflation for asset returns. It is motivated by the recent collapse in market-based measures of US inflation compensation amid the spread of coronavirus, to their lowest levels since the Global Financial Crisis …
25th March 2020
The surprising weakness of Treasuries alongside the collapse in US equity prices recently seems to have been driven by fire selling, not worries about inflation or debt. However, even if further falls in the stock market mean there are more forced sales, …
20th March 2020
While the spread of, and policymakers’ response to, the coronavirus may continue to exert a big influence on asset returns over the next year or two, we don’t assume that it will affect their performance during the rest of this decade. Macroeconomic …
4th March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Although Japan’s stock market has persistently underperformed its US counterpart since the financial crisis, there are several reasons why it may not continue to lag during the rest of this year and beyond. Chart 1 shows the cumulative returns in US …
13th February 2020
We think that the returns from US corporate bonds and equities will be nowhere near as good in 2020 as they were in 2019, given the outlook for Treasury yields, credit spreads, and corporate earnings. US investment-grade corporate bonds put in their …
3rd February 2020
We simply don’t know how far, or fast, the novel coronavirus outbreak will ultimately spread, so for the time being we are assuming that the response across asset classes will follow the same pattern observed during and after previous epidemics – that the …
29th January 2020
We don’t expect the recent marked outperformance of US mega-cap equities to continue during the rest of this year and suspect that it will unwind if a Democrat wins the race to the White House. The phenomenal showing by US mega-cap equities can be seen in …
23rd January 2020
We expect the S&P 500 to outperform Treasuries by much less in 2020 than in 2019, as government bond yields edge up, the equity risk premium stops tumbling, and corporate earnings continue to disappoint. While US large-cap equities and government bonds …
13th January 2020
We think that returns from “risky” assets – equities, corporate bonds, REITs and industrial commodities – will generally beat those from “safe” ones – government bonds and precious metals – again over the next two years, as the global economy finds its …
13th December 2019
Our baseline assumption is that the returns in common currency from mid- and large-cap equities will be similar in the euro-zone and the US in 2020, after a decade in which those in the US have outperformed substantially. The elections there next year, …
4th December 2019
We do not expect to see a resumption of the “ reflationary ” pattern that until recently had characterised markets over the past month. This is primarily because we think that the global economy will remain stuck in a low gear for some time to come, and …
21st November 2019
One reason to think that the relentless outperformance of the US stock market since the Global Financial Crisis (GFC) will not continue for another decade is its valuation, which has become comparatively stretched over the past year . Admittedly, …
15th November 2019
One reason to think that US equities will outperform US corporate bonds over the next couple of years is a larger-than-average wedge between their valuations. Comparing the valuations of US equities and US corporate bonds is not straightforward. One …
5th November 2019
We don’t think that asset valuations in general have risen to unsustainably-high levels, even though many are now far above their long-run averages. So we see no need for major corrections in asset prices. It is often argued that an asset’s equilibrium …
28th October 2019
Globalisation has probably peaked and could be partly reversed as a result of technological change and protectionist policies. This would have significant implications for asset markets, which have generally benefitted from increased economic and …
24th October 2019
We still think that returns from many “safe” assets, including most developed market government bonds, will fail to beat those from US dollar cash over the rest of 2019, even as “risky” assets, notably equities, REITs and corporate bonds, struggle against …
18th October 2019
We think that local-currency and USD-hedged returns from developed market government bonds will generally be poor through the end of 2020, but that USD- unhedged returns will be positive next year. Our detailed views of monetary policy can be found in our …
15th October 2019
Although US equity REITs still have comparatively high yields and low valuations, as well as solid fundamentals, we think that their outperformance of US equities will end given the outlook for Treasuries. 2019 has been a bonanza year so far for equity …
9th October 2019
Although we forecast a correction in the US stock market later this year, we think it will outperform Treasuries by a large margin in 2020-21. This view rests on an assumption that inflation will remain quite low, but positive. Other inflation outcomes …
30th September 2019
This short Focus is a primer on our Asset Allocation Service , which we launched in September 2019. It is split into three sections. Section 1 provides an overview of the service. Section 2 outlines our methodology for projecting returns. Section 3 …
27th September 2019
We think that this year’s joint surge in the prices of US equities and government bonds is on its last legs, given the outlook for monetary policy and corporate earnings. Share prices get a boost when there is a reduction in the rate at which investors …
23rd September 2019
This week’s FOMC meeting reinforces our view that many “safe” assets – such as some government bonds and precious metals – will return less than cash in US dollar terms later this year, as central banks in the US and elsewhere fail to ease by more than …
19th September 2019