In our recent paper, “Weathering the Storm: Exploring Climate Strategies”, we explored the main approaches to integrating climate considerations in investment portfolios. In this article, we dive deeper and look at some nuances in climate data that need to be
June showed similar trend characteristics to earlier in the year, with value and cyclical exposures rising again — but with a hint of caution caused by the emergence of new COVID variants and concerns over Fed tapering. Europe and the
Bond Compass: Good news was bad for bond investors in the first quarter, as improving growth prospects on the heels of accelerating vaccinations and fiscal stimulus pushed global yields higher. With administered doses nearing 700 million globally, the immunization process
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
The current backdrop poses the question, what are the best defensive strategies for a fixed income investor to pursue in a reflationary environment? As Figure 1 shows, a meaningful bond sell-off during a phase of quantitative easing (QE) is not unusual, largely because QE is ….
Is our board focused on the right issues? Does our board have the appropriate skills and governance process for effective ESG oversight?
Sector Compass: Light Sector Compass Reopening, Recovery and Rotation The sector rotation seen in flows and performance in the last two months of 2020 could continue given many investors still hold cash and are underweight the more risky areas. While
2021 Global Market Outlook COVID-19 has severely tested the global economy and markets in 2020. Aided by unprecedented monetary and fiscal stimulus, markets responded with surprising resilience. Equity valuations are critically dependent on whether a combination of treatments and vaccines
"Convertible bonds historically captured over 65% of equity upside but suffered only 50% downside"
"After this year’s deep contraction, the global economy is primed to rebound strongly in 2021, although the nature of the recovery will differ by sector and region."
High dispersion of returns between sectors has continued to offer significant opportunity for investors. We believe a selective approach remains the preferred path during Q4 2020 as uncertainty mounts around the US election, COVID-19 and regional challenges such as Brexit,
The Big Picture – Economics vs. Health trade-offs still dominate with big divergences Historically unprecedented times. We are through another quarter battling Covid-19 with optimism around vaccine releases tempered by high global case incidences led by India, Brazil, and the US.
While ETFs have been available in Europe since 2000, in the 10 years following the Global Financial Crisis we have seen a boom in ETF asset growth. Over this period, ETFs in Europe have seen a compounded annual growth rate
Our clients are constantly grappling with market uncertainty, shrinking margins, changing regulatory requirements and a fast- changing technology landscape. As a result, their investment …
Key points Polls suggest the general mood in the US is gloomy and the electorate disapproving Trump on many key election issues, according to RealClearPolitics. Media sentiment suggests that Trump is losing ground against Biden both in the entire country
Insights Active Quantitative Equity (AQE) There’s a lot of disagreement in the market right now about what is cheap, and what has positive market sentiment. These themes represent important complementary characteristics that we look for when building equity portfolios. When
Smart Beta strategies, such as low volatility, can allow investors to modify their portfolios to better reflect their ongoing return-risk appetite in their strategic allocation. It is possible to build defensiveness into portfolios, while maintaining a degree of upside potential,
Since our Global Market Outlook update in April, shock waves from the COVID-19 crisis have continued to flow through global markets, economies, and societies. As we look forward to the remainder of the year, uncertainty abounds. Equity prices seem thoroughly
State Street Associates | Current Trends In its simplest form, asset allocation might be viewed as the choice between stocks, bonds, and cash. Stocks offer an engine for growth. Cash provides safety. The role of bonds, however …
Sovereign wealth funds are often referred to as “rainy-day funds”, pools of cash that their government owners can draw upon in times of economic need. It is hard to imagine a rainier day or a greater …
State Street Global Advisors has identified the key considerations for investors in the coming quarter, and how markets can be navigated using SPDR ETFs. We remain positive on emerging market debt (EMD). While EMD has recently risen,less developed markets have
Research on sector rotation, which is a popular tactical asset allocation technique, often centres on using price momentum as the sole criterion to identify outperforming sectors. The aim here …
The volatility experienced on global fixed income markets in the first quarter, amid massive uncertainty emanating from the COVID-19 outbreak, has resulted in a changed landscape. Return-seeking investors are increasingly challenging the approaches they’ve used in the past. With sovereign
An Academic View As the COVID-19 virus continues to tighten its grip on the world – causing wide spread lockdowns and large-scale disruptions to global supply chains – governments, central banks, and regulators have been left with little choice but
In early December 2019, one of the world’s largest pension funds announced that it “decided to suspend stock lending until further notice.” This is one example of a growing number of asset owners evaluating their securities lending practices due to
What is the Best Approach? Unfortunately, portfolio rebalancing is not a free lunch. And there is no ultimate rebalancing rule that applies universally. Investors with different goals and preferences …
Insights ESG Growing fears around the threat of man-made climate change combined with the increasing attractiveness of renewable energy have led to a paradigm shift that is driving a steady transition towards renewables. Fossil fuels have been a mainstay of
Low yield in developed market bonds remains a key issue for investors. In this environment, we see the potential for stronger relative returns in emerging market debt, particularly local currency bonds. Heading into 2020, a mix of supportive factors could drive this asset class.
Carbon Tracker Initiative is an independent financial think tank that analyses the impact of the energy transition on capital markets and the potential investment in high-cost, carbon-intensive fossil fuels. Carbon Tracker has helped to popularise the terms “carbon bubble”, “unburnable
Growing fears around the threat of man-made climate change combined with the increasing attractiveness of renewable energy have led to a paradigm shift that is driving a steady transition towards renewables.
Executive Summary The survey results are based on 102 responses from asset managers and asset owners. The firms represented are primarily large (more than $100 billion under management) and based in the United States. All respondents serve in investment management, investment
There are a number of signs that over this past year, ESG investing is going mainstream. Investors have grown more sophisticated in understanding the challenges of ESG data, new regulation in Europe is propelling investors to seriously pursue climate-aware investing
Remind Me About 5G Communications Services was the largest change in sector classification late last year. The higher profile US sector stole the headlines, courtesy of several FAANG companies. The changes made by MSCI in their European Communications index, on
Despite the challenging trade environment, equity prices remain near their highest levels in a decade in both the US and Europe. Volatility has remained relatively low, despite intermittent spikes, leading to increasing investor concerns around equity price sensitivity to geopolitical
When defensive equity positions become more appealing, stocks that exhibit lower-risk attributes, including low beta stocks and stocks in traditionally defensive sectors, can become expensive. Risk measures are not sufficient to construct a defensive portfolio; valuation is also important, as
This year, a series of geopolitical shocks have hit business sentiment in an already aged expansion. However, these shocks have been tempered by an almost universal adoption of easier monetary and fiscal policies. On the US-China trade front, tensions have
After the late-2018 swoon in risk-asset prices, the early months of 2019 saw a sharp, steady rise in global equity prices, substantial declines in credit spreads, and lower global government bond yields. While concerns about slowing more aggressive Fed policies
In order to better understand the goals and challenges that plan sponsors face, we surveyed 195 plan sponsors in five markets: Australia, Ireland, the Netherlands, the United Kingdom and the United States. The survey, conducted in conjunction with YouGov, covered
The fixed income ETF market is still relatively young — the first fixed income ETF launched in 2002. Only 10 years ago, assets under management in fixed income ETFs represented $48 billion and circa 1.9% of the global fixed income
As the current cycle extends beyond the recent historical experience, it is tempting to get caught up in the latest swing in sentiment, often driven by a partial data picture. Looking back over the past 12 months, we can see
The most notable change in investor behaviour occurred toward US Treasuries, where overall demand collapsed, driven primarily by selling in the intermediate part of the curve. This could show that investors are not fully convinced that the Fed is about
At State Street Global Advisors, our baseline call in 2019 was for investors to continue to favour US equities, based on supportive monetary and fiscal policy and a contained inflation outlook. We cautioned investors to beware of volatility, on expectations
Strategy Espresso Theme of the week: Finding Value in US Financials What Rate Cut? On the day the Federal Reserve announced its first rate cut since 2008, the US Financials sector outperformed the S&P 500 despite what is traditionally assumed as a negative
This is an update to the 2017 SSGA study of central bank asset allocation.1 In contrast to the last study which focused on the allocation of excess reserves (i.e. the investment tranche) exclusively, this study reviews the entire reserve portfolio.
De markt van obligatie-ETF's is nog altijd relatief jong: de eerste obligatie-ETF werd gelanceerd in 2002. Pas 10 jaar geleden bedroeg het vermogen onder beheer (Asset Under Management, AUM) in obligatie-ETF's 48 miljard USD, goed voor ongeveer 1,9% van de
Strategy Espresso On 1 May, investors in US equities were celebrating. The S&P 500 had more than recovered all of the losses from last year’s Q4 sell-off to reach a new all-time high of 2,954. The CBOE Volatility Index (“VIX”), widely accepted
Strategy Espresso “Full-Blown Trade War is Quickly Shifting from Risk to ‘Baseline’” read a Bloomberg headline on Thursday 23 May, as analysts and economists from multiple institutions began adjusting their assumptions regarding whether a trade deal between the US and
Strategy Espresso Regular readers of the Espresso will know that we have been positive on emerging market (EM) local currency debt for some time. Despite escalating trade tensions weighing on market sentiment, we believe this hurdle will be passed, and
Strategy Espresso At the end of May, MSCI Emerging Markets will conduct their semi-annual index review and rebalance. As per usual, this process will create a certain amount of turnover in the index as companies are added and removed based
Equity markets surged back in the first quarter of 2019, but it was only towards the end that we saw investor confidence start to recover. The first move by investors was to defend their core equity positioning and consider reducing
