These are promising times for emerging markets (EM) debt, as we see a number of macro factors aligning in a broad tail wind for the sector. EM economic growth is leading the global recovery, yet EM is the only major sector with broadly attractive valuations. In developed markets, while rates have backed up from their extreme lows at the start of the year, monetary policies continue to anchor core …
Core government bond yields were lower and curves were flatter after a volatile week which, at one point, saw US and Europe diverge with US treasuries bear steepening while European government bonds experienced a bull flattening on Wednesday. Markets were caught between inflation concerns …
There is no universal approach to identifying value stocks or measuring their performance. Using various measures of a company’s fundamental value and picking value stocks by comparing them to sector peers would have boosted investment performance over the last decade. However, this style would still have lagged as value stocks kept getting cheaper and expensive stocks dearer.
Corporate debt is the fastest‑growing area of hard currency emerging markets (EM) debt, with almost USD 2.5 trillion outstanding and new issuance averaging 15% of debt outstanding per year since 2011. The asset class generated strong risk‑adjusted returns over the five years ended December 31, 2020, due to the …
The proliferation of crypto-currencies (CCs) and the popularity of these assets among investors has led us to question their nature, function, valuation and potential development. CCs are at the crossroads of technological innovation, finance and monetary policy.
When Covid-19 hit, many producers cut back production and drew down inventories as demand collapsed and the economic outlook was highly uncertain. While demand from cyclical end markets was hit hard, other end markets like …
The benefits of diversifying across a multitude of smart beta equity factors have been supported and explained in a host of research and literature1 . Single-factor indices (quality, value, momentum, low volatility, and small size) may reward market participants over the long term, but can be notoriously difficult to time over the shorter term. Multi-factor indices, on …
The sell-off in US Treasury bonds reversed over the last week with the 10-year bond yield dropping from its intraday high of 1.75% on 18 March. The decline was driven principally by falling real yields as inflation expectations were mostly stable. There was also a reversal in the recent outperformance of value stocks relative to growth stocks.
Vorig jaar was beurstechnisch een meer dan uitstekend jaar voor bedrijven in de “Environmental Solutions” sector. Als proxy voor deze bedrijven kan de iShares Global Clean Energy ETF (rhs) worden genomen die in 2020 de Nasdaq met …
Everyone knows the value strategy has been a grave disappointment out-of-sample since, say, 1990 (thirty years!). Even Fama and French know it. 2 And everyone knows the value strategy has been quite bad for the last 10+ years with the 2018–2020 period essentially a crash. Well, that’s all kind of true. But, as odd as this might sound, the realized …
Asia’s emergence as the world’s key engine of growth has been one of the most compelling investment stories in recent times. The newly launched Capital Group Asian Horizon Fund (LUX) (CGAH)1 is designed to tap into this attractive opportunity set and, in this Q&A, portfolio manager Christopher Thomsen explains why …
Eliminating carbon dioxide emissions over the coming decades will require multi-billion dollar investments, as well as a wide range of efforts to reduce energy consumption, increase efficiency, electrify and decarbonise processes, and nurture alternative fuels to economic viability.
Meeting Paris Agreement climate change targets means tackling the harder-to-decarbonise areas of the economy with technologies that don’t yet exist at scale. There is no silver bullet to tackling climate change. It’s likely the answer to getting to net-zero emissions by mid-century is to deploy everything we have, but faster. 2050 is the target date for net zero that the Intergovernmental Panel on Climate Change (IPCC) says[1] is what’s needed …
Big markets have a special allure for investors. They offer the promise of another Apple, Google, or Microsoft. But big markets also bring with them the threat of what Cornell and Damodaran (2020) call “the big market delusion.” Big market delusions generally begin with …
Core government bond markets remain in a nervous state. The good news about the vaccination roll out (UK and US), the passage of the US fiscal package, the concurrent rise in growth expectations and normalisation of the inflation outlook have conspired to take yields close to where …
The U.S. and European Union (EU) announced a four‑month suspension of all tariffs related to the long‑running dispute about unfair government support for leading aerospace companies Airbus and Boeing, signaling President Joe Biden’s desire to realign trade relations. This pause came on the heels of a similar agreement between the U.S. and the UK.
Green bonds first emerged as issuances by supranational development banks. Since then, the market has grown considerably, with greater issuer diversification across countries and sectors (see Exhibit 1). Yet, not all green bonds are created equally, and we believe in the need to discern among green bonds in our investments.
During the week of 15 of March, the bitcoin is nearing a new record high of 60.000 U.S. dollar. This unprecedented rise in price begs to wonder, what do institutional investors think about Bitcoin. In this article some of the opinions of institutional investors on bitcoin and cryptocurrencies in general will be shared.
A decade ago, after undertaking comprehensive proprietary research into the characteristics of low-risk stocks, we launched our global low-volatility equity strategy. To mark the tenth anniversary, our quantitative research group reviewed the research to determine if our initial analysis still holds true. Were the least volatile stocks from each sector more …
Apartments, along with industrial, are the preferred sectors in 2021 for investors in US property, according to the Pension Real Estate Association, Investment Intentions Survey.1 The case for apartments is welldocumented and well-supported by data from a variety of sources. In the US, apartments have offered investment returns …
The strategy maintains a focus on companies that we believe offer a positive impact today and an underappreciated impact in the future, as well as sustainability and robustness in their future earnings and cash flow growth. And our fundamental research platform and dedicated Responsible Investing (RI) team—which is focused on environmental, social, and governance (ESG) issues— provide …
Beyond the immediate challenge of the pandemic, the US-China relationship is the main source of global instability. On this front, the newsflow is not encouraging. The meeting in Anchorage between the US Secretary of State and National Security Advisor with their …
As the economy recovers and cyclical stocks begin to outperform, how should we think about the connection between equities and US Treasury yields? A recent rapid increase in US Treasury yields has unsettled equity markets, and to understand this
Italian bonds are in a sweet spot in the market at the moment, but what is contributing to their newfound appeal and will it last? We think there are a couple of reasons why Italian bonds are appealing, but the sparkle may tarnish in a few years’ time.
The magnitude of change and disruption experienced around the globe in 2020 was remarkable on many levels. The coronavirus pandemic enveloped the world, prompting widespread upheaval to established patterns of conducting business, communication, travel, and the daily lives of people and communities. Amid the evolving …
Allocations to factor-based strategies in corporate bonds have grown, with an expanding body of research demonstrating its advantages. In contrast with traditional bond investing, which often focuses on actively managing a portfolio’s sensitivity to changes in interest rates (duration), credit risk and currency exposure, factor investing involves picking …
Applying factors to corporate bond investing can help build a more resilient portfolio, particularly when markets face rising interest rates and heightened volatility. Olivier Laplenie and Charles Cresteil explain.
For bond markets, this year has been all about rising inflation expectations and more recently real yields. This has pushed yields higher and dented total returns for areas of fixed income with higher levels of interest rate risk. The effect such moves have depends on the interest rate sensitivity (duration) of the …
Capital markets are increasingly penciling in a higher interest rate scenario as reflected in a sharp steepening in the Treasury yield curve over the past 30 days. The yield on the 10-year bond has increased by 40 bps over the past 30 days. Despite dovish messaging …
Ushered into existence by government subsidies and guarantees, the renewable energy infrastructure sector has grown into a diverse, global and highly competitive asset class. Appetite for renewable energy infrastructure among asset owners has been extremely …
According to the International Monetary Fund (IMF), Emerging Markets’ Gross domestic product (GDP) should reach 6% and 8.2% for China, on the back of vaccine deployments and accommodative central banks. Combined with attractive credit …
Why Credit Investors Need to Become Active Duration Managers The importance of duration for credit performance and five ways to improve it. Credit investors typically pay little attention to duration, seeing themselves primarily as bottom‑up investors who specialize in sector and
In deze dekkingsgraadscan vindt u meer informatie over de dekkingsgraad van een gemiddeld Nederlands pensioenfonds. We geven een overzicht van de ontwikkeling van de feitelijke en (12-maands) voortschrijdend gemiddelde dekkingsgraad in het …
Q1 2021
Bad news on the health front; volatile economic data; hopes that the US national 4th of July holiday can be celebrated with a BBQ; and further lockdowns, in place or imminent, in Europe. This odd concoction on the anniversary of the Great Lockdown did not keep …
Emerging-market economies did not shut down to the degree that occurred in developed-market economies in the face of COVID-19 in 2020, and neither are they are shutting down as aggressively now. While significant growth downgrades for 2020 …
The new year has awoken the bond market from its slumber. What began as a gradual climb in nominal yields from the summer accelerated in February with the yield on the US 10-year Treasury note briefly topping 1.6%, and significant moves higher globally …
Last year was nothing if not remarkable. The coronavirus pandemic led to an implosion of economic activity before monetary and fiscal stimulus provided the foundation for a recovery unlike anything we have ever seen. From an economist’s perspective, one insight …
Are whales man’s greatest ally as rising temperatures pose unprecedented threats to the planet? Trees are often championed in the fight against global warming: Photosynthesis captures significant quantities of carbon dioxide (CO2). However, the carbon footprint …
One of the most tangible effects of climate change is already well underway – the surge in extreme weather. If there was a VIX for weather, it would be near all-time highs – and trending higher still. Exhibit 2 illustrates this greater weather volatility in …
As mentioned previously, this trend was borne out of rising inflation expectations and augmented by a nudge higher in real rates. If this latter rate is the key discount rate for risk markets such as equities, it helps explains why this market has been …
The economy remains on pause in many parts of the world, but the vaccine rollout improves the odds of normalization and supports a positive medium-term outlook. In the meantime, global economies remain supported by the large stimulus measures from …
In a recent publication by DWS, forecasts are made for 10-year returns on ESG indices. These capital market assumptions are made to assist investors in constructing strategic long-term portfolios that keep in mind the traditional financial metrics and ESG impact metrics. The construction of the forecasts is done incorporating the …
According to our forecasts, Asia1 is projected to lead the global economic recovery in 2021. On a GDP-weighted basis, the region is expected to expand by 6.6% this year, up from -1.0% in 2020 (Chart 1). Excluding China, Asia will expand at a slower rate of 4.7% in 2021, up from …
It is part of a broad package of legislative tools designed to reorient capital towards more sustainable businesses. The main objective is to ensure that financial market participants are able to finance growth in a sustainable manner over the long term, while combating so-called greenwashing in which the positive environmental …
China and its strong economic recovery from the coronavirus pandemic have not gone unnoticed. Fourth‑quarter gross domestic product (GDP) growth came in at 6.5% year over year, pushing the annual average growth to 2.3% for 2020. China should be the only major economy to record economic growth …
The global economy runs on energy and, by and large, energy still requires greenhouse gas emissions. Energy efficiency can reduce demand; renewables are driving down the cost of carbonfree energy and can be coupled with storage or …
A pick-up vs. EUR-denominated investment grade bonds of +110 bps, investors lock-in a higher yield in the USD market as hedging costs to EUR remain low …
We share the views of some of our portfolio managers and economists on navigating the equity and fixed income markets in the year ahead and beyond. They also share how the last year has influenced long-term developments in economic and market outlooks.
