Uncommon truths It is time to forget central scenarios and think about improbable but possible outcomes. Market sentiment is now mixed (thanks to the Fed), so our list of surprises contains something for everybody (these hypothetical predictions are our views
The Covid pandemic again dominated our thoughts in 2021. Nevertheless, cyclical assets did well (though our list of 10 surprises had mixed results). We are more cautious about 2022. A year ago, we were hopeful that vaccines would allow strong
The economic recovery has been thrown into jeopardy by the emergence of the new Omicron variant of Covid-19. However, we think that it is unlikely to completely derail the cycle and should allow central banks to tighten monetary policy in
Could a lack of upstream investment lead to a shortage of oil and higher prices? We think lower investment was due to falling prices and believe it is now reversing. We remain wary of oil.
Given our view that 2022 will be a year of transition and that asset class returns will converge, we adopt a more balanced approach within our Model Asset Allocation, though still maintain a preference for cyclical assets. We reduce the
We believe that Africa will be the economic and investment story of this century. However, it is a continent of 54 countries, each with its own potential, pitfalls and capacity to absorb different forms of investment. The aim of this document is
The sharp rise in inflation rates across many economies driven by supply chain issues and labour shortages has been a major concern for investors as economies opened up after pandemicrelated lockdowns. Among other effects, this may have an impact on
Uncommon truths: Rising bond yields have recently been associated with falling equity prices (reversing the trend of this century). We think this is a temporary reversal and do not fear higher yields, unless caused by costpush inflation (we would then
Despite another good three months for cyclical assets, we are sticking with them within our Model Asset Allocation. We make minimal changes, with a reduction in the allocation to highyield credit (to Underweight) and a corresponding increase to equities (going
A range of emission and temperature change scenarios are examined. It is clear that technology will be key in mitigating change. However, we think large-scale adaptation could benefit infrastructure, engineering, housing and …
With Covid-19 top of mind, impacting both operations and investment strategies, the impact of the ongoing pandemic is the major theme running throughout. This includes an examination of adjustments made in response to the crisis and the impact on long-term
Strategic Sector Selector The resilience of the rally in global equities was tested in the second quarter of 2021 by a resurgence of COVID-19 cases and more hawkish messages by the US Federal Reserve. However, markets continued to grind higher
Global debt ratios increased by a record amount in 2020. Half was due to rising government debt and the biggest gains were in developed countries. Falling bond yields dampened the rise in debt service ratios but that may not last,
We believe this economic cycle is in its infancy and, despite valuation concerns, are sticking with a preference for cyclical assets within our Model Asset Allocation. We make minimal changes, with a small reduction in the allocation to commodities (to
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
The biotech sector has generated stellar returns since its inception and we view it as a strategic pillar of our model allocations. However, the growth advantage is not what it was and we fear the short-term effect of rising bond yields.
What is blockchain technology? Blockchain technology is an umbrella term covering a set of tools, methods, and processes for electronic recordkeeping between multiple participants. Blockchains are peer-to-peer (P2P) networks composed of different entities that collectively maintain and update a shared set of records.
Central banks in a pickle Uncommon truths We think tapering is off the agenda for 2021 and believe that central banks may purchase increasing amounts of assets. That may be good for risk assets this year but we worry where
Uncommon truths 2020 – the year of living dangerously Our list of 10 surprises didn’t envisage the global pandemic that dominated 2020. Even so, we had some successes and cyclical assets did well. We expect that to continue in 2021,
Uncommon truths Looking at global stock indices, you wouldn’t know there had been a global pandemic and recession during 2020. On the other hand, gold bears witness to the problems and Bitcoin has recently taken up the mantle. Applying our
The Big Picture – 2021 Outlook 2020 has seen defensive assets outperform cyclicals. We expect the opposite in 2021. Despite short term Covid-related risks, recent vaccine news provides valuable light at the end of the tunnel. Unfortunately, some cyclical assets have
Multi-sector asset allocation outlook – Q4 2020 IFI multi-sector asset allocation overview Macro factor summary: We have upgraded our growth expectations for the US and Europe and expect growth momentum to persist in 2021. We expect spare capacity to keep
Welcome to our fifth annual Global Factor Investing Study, based on an interview programme with 238 factor investors. This study incorporates the views of 138 institutional investors and 100 wholesale investors that are together responsible for managing over US$25.4 trillion
ESG disclosures: the bedrock of the sustainable finance agenda At Invesco, we consider environmental, social and governance issues (ESG) not only as financially material considerations but a core part of long-term value creation. And we are not alone- asset managers
Uncommon truths I have long expected Joe Biden to be elected as the next president of the US. I believe the stock market implications are less than many fear but not all sectors will be impacted in the same way.
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
Global Fixed Income Strategy In November 2018, the US Federal Reserve (Fed) announced that it would conduct a broad review of its monetary policy framework. The new framework will likely shape monetary policy in …
Uncommon truths China is often accused of over-investing and its capital productivity has fallen. However, marginal efficiency of capital is positive and return on equity is in the middle of the developed comparator range. We recently wrote that China’s economy
Persistent positive skew in the distribution of returns across index constituents suggests that a successful active equity management program must include a process to mitigate omission risk – i.e. the opportunity cost of missing out highreturning stocks that buoy average
Uncommon truths Covid-19 has not gone away, shutdowns are being selectively reintroduced and we suspect the recovery becomes more difficult from here. We maintain a diversified model asset allocation. We have been living with Covid-19 for more than six months
Strategic Perspective. It is difficult to imagine that only three months ago we were writing about riding out the first global recession, record levels of unemployment and declines in earnings not seen during any of our lifetimes. This historic decline
Last week, I laid out five things to watch in the month of August. Over the past seven days, we’ve seen new developments in each one. This week, I offer a quick update to each of those five issues, and
Evaluating the four P's (Pandemic, Policy, Pricing and Portfolios) The first half of this year has been dominated by the spreading coronavirus pandemic and the policy response to it. The latter has been overwhelming; both monetary and fiscal policy are
Uncommon truths What role can alternative assets play in our model asset allocation framework? We look at real estate, commodities, private equity, hedge funds, diamonds and fine wines. We think some are core assets, others tactical while some have no
Factors in two flavours Strange things are happening with factors. Was the market turbulence in February and March just a dream? Factors seem to tell us that the market …
Welcome to Invesco’s eighth annual study of sovereign investors. Since the publication of the first report in 2013, the study has evolved to cover 139 institutions, including interviews with chief investment officers, portfolio strategists and heads of asset classes at
The European Recovery Instrument is Neither a Hamiltonian Moment nor a non-Hamiltonian Muddle We answer key questions about new EU proposals for a joint fiscal cushion in response to COVID-19: Are these plans a “Hamiltonian Moment” — after Alexander Hamilton’s
In 2019, the number of resondents grew from 145 to 159 fixed income professionals, to incorporate the views of 121 institutional and 38 wholesale investors that are together responsible for managing over …
In the face of what we expect to be the deepest global recession in living memory (by far), equity markets are running with their eyes wide shut into what feels like a trap: they are focusing on policy support and
Overview: Extraordinary Times, Extraordinary Measures The key epidemiological data about the pandemic point to important, shared trends across countries amid major differences in national experiences. The pandemic has followed an exponential trajectory — although at very different rates around the
China has seemingly “flattened the curve.” The same cannot be said of the US.
The Invesco White Paper Series – March 2020 Due to its simplicity, market-cap weighting has long been a popular means of calculating the composition of market indexes. But as an investment strategy, market-cap weighting has limitations — frequently resulting in outsized
This is not the bear market we were expecting to end the cyclical uptrend in equities and definitely not the first quarter we envisaged when we wrote our previous edition. Our job is made more difficult by the uncertainty surrounding
Macro factor summary: The coronavirus crisis has delivered a shock to the global economy that is unprecedented in size and cause. Methods of economic forecasting based on standard economic variables are not sufficient to analyze global economic growth. We have
Highlights Municipal bond prices fell during March, resulting in negative returns for the first quarter, on fears about potential economic fallout of a global pandemic. Municipals significantly underperformed US Treasuries, as Treasury yields dropped to record levels and municipal bonds
The Big Picture Is this a buying opportunity or the half-way stage in a larger slump? The truth is we don’t know, so we have constructed a range of scenarios that see the S&P 500 anywhere between 1400 and 3000 in 12
COVID-19 has pressured the global economy in an unprecedented way. What will be the lasting impacts? In order to get a full picture of the impact of this global pandemic, Invesco’s Global Market Strategy (GMS) Office has partnered with a
Environmental, social and governance (ESG) have become important considerations in mainstream investment processes. Adoption rates vary by region and by sector. Following an extended bull market, the spread of the corona virus in early 2020 and the associated containment measures
Uncommon truths Have credit spreads widened enough? We think the answer depends upon what happens to the economy and we use US credit markets to give historical context. This leaves us more concerned about high-yield than investment-grade but we believe
Uncommon truths Have credit spreads widened enough? We think the answer depends upon what happens to the economy and we use US credit markets to give historical context. This leaves us more concerned about high-yield than investment-grade but we believe
