What are Central Bank Digital Currencies (CBDCs)? What is the impetus behind CBDCs when the ethos of crypto goes against the very role of central banks? How will CBDCs affect the widespread use of cryptocurrencies or the need for crypto
Our longer-term asset class forecasts are forward-looking estimates of total return and risk premia, generated through a combined assessment of current valuation measures, economic growth, inflation prospects, ESG considerations, yield conditions as well as historical price patterns. We also include
Despite having successfully navigated volatile markets and the uncertain economic outlook in 2020, long-term institutional investors continue to face significant challenges. Surveys show 66% of pension funds consider themselves to be cashflow negative and 53% of those that are cashflow
In the second piece of our three-part report1 , we discussed the micro and macroeconomic impacts of China’s green transformation. While it is difficult to precisely quantify these impacts as China transitions to a carbon-free economy, we do know that
In Credit: Government bond yields were little moved last week. The benchmark US 10-year note ended the week with a yield of 1.58%, barely moved from a week earlier. Inflation expectations, which have risen materially in the last year and
Flash update: Ever since 2014, deposit rates in Europe have been negative, creating a headache for investors with this phenomenon unlikely to change in the near future. Current market pricing, for instance, does not have the deposit rate returning to
Issuance of green bonds began more than 10 years ago in response to (institutional) investor concerns about climate change and its political and economic implications.[1] They have become a major pillar of an asset class of sustainability-linked fixed income securities that continues
Downside risk management is crucial. Volatility and low yields are likely to persist over the next few years as the global economy recovers from the shock of the coronavirus. Navigating this environment will be difficult, particularly as returns from equities
China’s economy grew robustly in the first quarter of 2021, at least on the face of it. However, underlying growth momentum has slowed. This should reduce any risk of monetary tightening that investors are worried about. The real risk is
In February 2018, Templeton Global Macro (TGM) released its original paper on the topic of environmental, social and governance (ESG) factors in sovereign fixed income investing. The paper (Global Macro Shifts—issue 9 [GMS-9]) explored the team’s novel approach to ESG
Whilst the definition is fairly broad, a traditional DMAC investment approach aims to build a balanced portfolio of directional trades that mix traditional and idiosyncratic premia (betas) by taking risk-on/risk-off positions using fundamental macro and market analyses that are not
Some investors view emerging markets in general as risky, and this perception sometimes carries through to emerging market (EM) corporate debt. But the downside experience in this asset class has been remarkably limited. Display 1 shows the losses suffered by
For us, active is more than our investment approach – it is the way we translate ideas into action, how we communicate our views and the partnerships we build in order to create the best outcomes for clients. We take
The world runs on energy. Unfortunately for the future of the climate, the current energy system relies heavily on fossil fuels—the primary source of greenhouse gas emissions. Enabled by emerging technologies and rapidly declining costs, the transition from traditional fossil-based
Climate change is the defining challenge of our time. Human activities are held responsible for the long-term heating of Earth’s climate system, observed since the pre-industrial period. The burning of fossil fuels is considered the primary contributor to global warming.
Market weekly: Green bonds have grown and matured as a fixed-income segment over the past decade. The need for climate action has spurred a raft of green projects and activities that combat climate change and other environmental challenges and seek
In Credit Inflation arrived in the US last week. There was also a bumper crop of strong economic data releases. This had been largely expected and remarkably yields fell to the lowest level in a month with the US 10-year
Volatility in interest rates year-to-date has unevenly impacted credit markets. Investment grade credit (IG) weakened in sympathy with sovereign yields, especially in high quality and long duration paper. IG bonds were down -3.6% in the U.S. year-to-date, and -0.5% in
Investors are keenly focused on the risk of inflation, as higher bond yields would hurt both stocks and bonds. Over the last week, inflation data came in hotter than expected, yet both bonds and stocks rallied. It looks like our
Waarom Europa's ambitieuze nieuwe klimaatdoelstelling zal helpen om koolstofneutraal te worden en investeringen in de schone energie-industrie te stimuleren. Naar een hogere versnelling schakelen. Dat is precies wat de Europese Unie zojuist heeft gedaan in de stappen die ze zet
The asset class offers a low‑duration profile, attractive yields. Many investors tend to focus on bank loans only when there is a broad consensus about the Federal Reserve raising interest rates in the short term. While loans have historically performed
Our outlook draws on our wide range of independent investment managers to deliver asset class insights. Each manager approaches the economic environment with a different lens and offers views to help inform your decision making. As we look forward to
In this memo, we aim to explain how the Bitcoin network functions as a unique energy buyer that could enable society to deploy substantially more solar and wind generation capacity. This deployment, along with energy storage, aims to facilitate the
Rising UST yields amid hopes of economic recovery are causing the markets to question whether the Fed will pause its bond-buying programme. We don’t think the Fed will change its accommodative stance in the near term. However, investors should prepare
Aggressive stimulus and labor market tightening mean higher inflation risk. Asset and commodity prices have been moving in line with the view that supply constraints and a weaker U.S. dollar are putting incipient pressure on underlying inflation trends. Contrary to
In April T. Rowe Price published an article named “Why ESG Factors Matter in Asia Credit Investing”. In the article, they discuss the upcoming importance of ESG factors when looking at Asian credit. T. Rowe Price expects that the ESG
Interest rate volatility has been the main driver of performance in credit markets over the past couple of months. Heightened inflation expectations drove US Treasury rates sharply higher in March, with 10-year Treasuries reaching levels not seen since January 2020,
Global Asset Allocation: The View From Europe Equity markets are riding higher on unwavering optimism, which has driven the S&P 500 up over 20% above its pre-COVID-19 levels. Despite higher valuations, bouts of risk and pockets of froth in the
In het afgelopen decennium heeft multifactorbeleggen in bedrijfsobligaties een belangrijke ontwikkeling doorgemaakt. Dankzij toegang tot betere datasets en een uitgebreide hoeveelheid onderzoek hebben beheerders de lat aanzienlijk hoger kunnen leggen. Beleggers hebben nu toegang tot robuuste, op factoren gebaseerde
This time really is different. Every recession is subtly different from the last. However, the events that led to the great recession of 2020 were unique, at least in modern times. A sudden stop in economic activity, imposed by governments
Covid-19 index: when might life return to ‘normal’? As one of the world’s largest economies the US is a key focus for investors. With every country attempting to return to normality following the coronavirus pandemic, we are monitoring when US
Fixed Income Outlook–2Q2 The US Federal Reserve’s new average inflation targeting framework means that the central bank will not raise policy rates until realised inflation has risen sustainably to above its 2% target. That is, it does not intend to
The Yin and the Yang China famously has the world’s second largest economy and a GDP growth rate that’s still north of 6%. What’s particularly enticing to an equity investor, however, is a stock market capitalization of $4 trillion, liquidity
Facial Recogntion and Human Rights: Investor Guidance Technology has brought the world some wonderful benefits – and some wonderful investments. Technology has allowed many professional workers to continue their jobs from their homes during the current pandemic. President Biden conducted
Market weekly The outlook for US interest rates is shifting towards a normalisation of central bank policy now that the economic recovery appears to be entrenched. Ken O’Donnell, head of short duration fixed income, discusses how investors could tackle this
De verkiezing van Joe Biden in de VS en Covid-19 zijn de katalysatoren die ervoor zorgen dat de ESG én rendementsbewuste belegger de komende jaren volop aan haar trekken zal komen. Binnen de sectoren “Schone Energie” en “Duurzame Voedselindustrie” zullen er zich volop interessante belegging mogelijkheden voor gaan doen.
Strategic Sector Selector Global equity markets posted strong returns in 2021 Q1 after a double-digit rise in the final quarter of last year despite a renewed rise in infection rates in Europe, South Asia and South America. We think the
Defined Benefit Pension Trends J.P. Morgan Asset Management Strategy & Analytics | March 2021
Monthly Investment Outlook ■ In March, rising yields caused a dramatic rotation in equity markets, leading to modest gains in stock market indices, while exposing global bond investors to losses. ■ Economic activity in the world’s largest economy continued to
Danish versus Dutch mortgage investments: How do they compare? Many institutional investors have been attracted in recent years by the potential for high yields on mortgage investments. Exposure to the mortgage market can be achieved in various ways. An interesting
Low-volatility investing has become an investment style in its own right with the launch of a number of low-volatility equity funds, in particular since the global financial crisis of 2008. Such funds are invested in low-risk stocks and the managers use different risk measures to identify …
There has been a degree more stability or calm in core government markets over the last couple of weeks. This comes after a very difficult start to the year, especially in the US.
Afgelopen zomer hebben het kabinet en sociale partners overeenstemming bereikt over een vergaande herziening van het pensioenstelsel. Dit pensioenakkoord heeft grote gevolgen voor hoe pensioen wordt opgebouwd en wordt belegd. In deze serie bespreken we het pensioenakkoord en de gevolgen voor het beleggingsbeleid.
First, we look at a recent publication from GMO named “The duration of value and growth”. Here they look at the comparison between bond duration and value and growth. The advancement of the coronavirus in the market has reinforced the idea that value stocks are ‘short duration’. This means that whenever bond yields rise …
The ebb and flow of US real interest rates, inflation expectations and the future level of policy rates remain the key drivers for asset returns globally. For example, local currency emerging market debt yields have largely mirrored those of …
While the markets reflect an optimism borne of nostalgic thinking and a reopening narrative, the global economy faces many structural challenges that demand reflection and attention to what is priced and the cost of misplaced …
Commodities returns have been lacklustre for a long time, and many investors have divested from the asset class. In this report, we put the spotlight on commodities, which are poised to become an invaluable component in the investor’s portfolio. There are numerous …
Oil and industrial metals have rallied since late-2020 on expectations for a swift economic restart, sparking talk of a new commodity “supercycle.” We see a more nuanced outlook – with a divergence across different commodities. The lift for oil from the economic restart is likely to be transitory, while some metals may benefit …
Valuations of clean energy stocks, as represented by the iShares Clean Energy index, (an exchange-traded fund (ETF) that we view as a proxy for the clean energy equity sector), are now up by around 16% from the lows in early March.
Investors hoping that pent-up demand will fuel a sustained post-coronavirus economic recovery in Europe may end up disappointed. Although a backlog of demand has built up during the lockdown, its potency is likely to be reduced by …
