5-Year Capital Market Assumptions
Jeffrey L. Knight, CFA, Global Head of Investment Solutions, Co-Head of Global Asset Allocation, conducts his team's semi-annual review of capital markets and forecasted returns.
Inflation and Market Valuations
Colin Moore, Global Chief Investment Officer, considers the impact renewed inflation expectations have on fixed income and equity market valuations.
Corporate Governance in Japan - Progress and Pragmatism
Michael Hamblett, Analyst, Responsible Investment, looks at the continuing corporate governance reform in Japan and the progress that has been made in how Japanese companies are managed.
Commodoties and ESG
David Donora, Head of Commodities, examines the challenges posed by responsible investing in commodities.
Investment Strategy Outlook Q1 2018
Jeff Knight, Global Head of Solutions, considers the “Buffett Challenge” and proposes one of his own.
Emerging Market Equities Look Strong After 2017 Rally
In an interview with Pensions and Investments, Dara White, CFA, Global Head of Emerging Markets Equity, discusses his 2018 outlook for the asset class, where he sees opportunity, and how he finds worthy emerging markets investments.
Additional reading: Emerging Markets: Valuations Are Still Attractive
The MSCI Emerging Markets Index gained 37.5% in 2017, but emerging markets still have a relative valuation advantage over developed markets on a forward price to earnings ratio basis.
Fixed Income Quarterly Review
Our Fixed Income team provides its quarterly review of the U.S. fixed income market.
Latin America 2018: Balancing Short-Term Political Uncertainty and Ongoing Economic Recovery
Ilan Furman, Portfolio Manager, Global Emerging Markets Equities, looks at the current state of the Latin American equity markets and sees the possibility of long-term improvement beyond any short-term uncertainty.
Emerging Markets 2018
Dara White, CFA, Global Head of Emerging Markets Equity, sees a clear path for emerging markets’ continued good performance, as perennial caveats, dollar strength and China weakness, stay largely in check. Earnings is the key driver going forward.
Additional Reading: Emerging Markets: Outperforming the World
The MSCI Emerging Markets Index gained 37.5% in 2017, outperforming the MSCI World Index (developed markets), which rose 23.1% during the same period.
Japan: More Tailwinds than Headwinds for 2018
Daisuke Nomoto, CMA (SAAJ), Head of Japanese Equities and Senior Portfolio Manager, concludes that Japan’s equity market, supported by the inflationary goals of the current government, reasonable valuations and favorable economic backdrop, can continue its upward trend.
A Synchronized Upswing in Global Growth
Mark Burgess, Deputy Global CIO and CIO, EMEA, discusses the current period of synchronized global growth and the macro-economic and geo-political events that could influence performance in 2018.
Fixed Income 2018: Facing Facts
Colin Lundgren, Global Head of Fixed Income, looks at the success fixed income markets have had over the last two years and questions whether the environment can support a third successive year of good performance.
Four Questions for Edward Al-Hussainy
Ed Al-Hussainy, Senior Interest Rate and Currency Analyst, gives his perspective on monetary policy in a low inflation environment, the new Fed chair, balance sheet unwinding and tax cuts.
Commodities Hitch a Ride on Global Growth
David Donora, Head of Commodities, discusses the factors that may increase demand for commodities in 2018 including stronger economic growth in developed and developing markets, a weak U.S. dollar and further fiscal stimulus.
Quantifying the Effect of the Bank of Japan's Equity Purchases*
Toby Nangle, Global Co-Head of Asset Allocation and Anthony Yates, Former Professor of Economics, Birmingham University; former Senior Advisor, Bank of England, evaluate the quantitative easing program of the Bank of Japan, which stands out for its size and scope.
The Conundrum of Disappearing Market Volatility
Jeff Knight, Global Head of Solutions and Asset Allocation, discusses the root causes of enduring low volatility in the markets, catalysts that could change the environment, and why an adaptive approach to risk allocation makes sense given the asymmetric risk/return environment.
Additional Reading: The Low Volatility Puzzle: Is This Time Different?*
Research posted on the Liberty Street Economics blog compares the "complacency" that the market is experiencing now, with the market environment immediately prior to the financial crisis. David Lucca, Daniel Roberts, and Peter Van Tassel, Federal Reserve Bank of New York Liberty Street Economics (blog), November 15, 2017
New IRS Pension Plan Mortality Table
Thomas Egan Jr., FSA, EA, CFP; Actuary, Liability Driven Investments, examines the impact the new IRS mortality table has on plan liability for minimum funding, lump sum pension payments and PBGC variable premiums for underfunded plans.
Investment Strategy Outlook Q4 2017
Jeff Knight, Global Head of Solutions and Asset Allocation, assesses his team's approach to an equity market widely considered to be overvalued, but which shows little sign of weakness.
Japan: A Positive Outlook Takes Hold
Daisuke Nomoto, CMA (SAAJ), Head of Japanese Equities, Senior Portfolio Manager, assesses the current state of the Japan equity market and concludes that some long-sought economic goals and reforms are finally taking hold.
Risk-based Approaches to Multi-Asset Investing*
Jeff Knight, Global Head of Solutions and Asset Allocation, discusses risk-based approaches to multi-asset investing in a webcast sponsored by Institutional Investor Journals and Columbia Threadneedle Investments.
Discussion topics include: Definitions of multi-asset and risk-based approaches; implementation, risk management and benchmarking; and allocating to a risk-based framework within a diversified portfolio.
Contemplating the Death of "Abenomics"
Alex Lee, Portfolio Manager, Japanese Equities, looks at the upcoming Japan election and what the ramifications may be for the Japanese market in the short-run.
Asia's "Great Moderation" Holds Promise for Equities
Soo Nam Ng, Head of Asian Equities, compares the relative low level of volatility in the U.S. to the current environment in China and sees the shift in emphasis from fast growth to sustainable growth as beneficial to the long-term equity market prospects in the country.
What The Fed's Balance Sheet Runoff Means For Bonds
Gene R. Tannuzzo, CFA, Senior Portfolio Manager, reviews the proposed framework for the Fed's balance sheet unwinding program and its possible implications for fixed income markets.
Update: Capital Market Assumptions
The Global Asset Allocation Team performs its semi-annual review of market expectations. This helps the team set strategic asset allocations and design portfolios with diverse investment goals. Maintaining long-term forecasts provides helpful context for responding thoughtfully to daily swings in market prices.
New York University Professor, Menachem Brenner, who pioneered the VIX index, is currently working on a measurement for "ambiguity", or uncertainty, as distinct from risk, in an attempt to explain why markets are demonstrating historically low volatility readings. Read his interview with the Nikkei Asian Review.
The Long Unwinding Road of Quantitative Easing
Mark Burgess, Deputy Global Chief Investment Officer, assesses the next phase of global monetary tightening. The U.S. Federal Reserve has raised rates several times since December 2015 and has signaled the beginning of the end of QE. Will other central banks follow?
Investment Strategy Outlook: Three Thoughts About Today's Low Volatility Conditions
Jeffrey Knight, CFA, Global Head of Investment Solutions, examines the low volatility environment and makes observations on the asymmetric risk environment.
New Accounting Standard May Accelerate U.S. Pension De-Risking
Thomas Egan Jr., FSA, EA, CFP, Actuary, discusses how the latest change to FASB rules should encourage plans to move toward de-risking strategies. With less emphasis on Expected Return on Pension Assets, the objection to Liability Driven Investing, as well as a larger allocation to fixed income in general, has been removed.
Emerging Markets Spotlight — India and Argentina
Natasha Ebtehadj, Portfolio Manager, Asian Equities, looks at Prime Minister Narendra Modi's reform program and suggests that efforts to modernize the financial system will have lasting benefits for the country.
Additional Reading: Argentina: The "Emerging" Emerging Market
Ilan Furman, Portfolio Manager, Global Emerging Markets, discusses Argentina’s efforts to reform its economic health and what its reinstatement to the MSCI Emerging Markets index will mean in symbolic and practical terms.
What Will End The Search For Yield?
This paper assesses the impact that yield-driven fixed income investing has had on the market and the drivers of the search for yield.
When Balance Is Not Enough, Pt. 2
Jeffrey Knight, CFA, Global Head of Investment Solutions, looks at the performance of the Adaptive Risk Allocation portfolio since the U.S. election and how the market state approach to risk allocation may be more beneficial to portfolios in the long-run than a purely balanced risk approach.
Hedging Interest Rate Risk With Floating Rate Loans
With the Federal Reserve having changed its tack from accommodative to one of normalization, investors will look for ways to hedge against rising interest rate risk. With their adjustable coupon, floating rate loans have the potential to hedge risk in a rising rate environment.
Alternative Beta Primer
Bill Landes, PhD., Deputy Head of Global Investment Solutions and Alternative Investments, examines the use of alternative betas as a strategy for increasing portfolio diversification and improving risk-adjusted returns. Alternative betas have minimal market directionality, and are less correlated with traditional markets, making them good portfolio diversification tools.
Asian Bond Markets Versus the Federal Reserve Bank
In sharp contrast to 2013, when the suggestion of higher rates by the Fed was enough to disrupt emerging currency markets and convince investors to significantly reallocate out of emerging markets, Asian bond markets have shown resilience in response to rising U.S. interest rates and the new administration, as several of the region’s central banks continue to reflate in order to maintain a trend of stronger economic growth.
Additional reading: Emerging Markets' Cloud Receding
Krishan Selva, CFA, Client Portfolio Manager, Global Emerging Markets, discusses the improving outlook for emerging markets equities as the new U.S. administration softens its rhetoric and adopts a more pragmatic approach.
When Balance is Not Enough
Jeff Knight, Global Head of Investment Solutions, discusses the benefits of employing an adaptive approach to risk allocation. With uncertain prospects for continued gains in equities and bonds, Knight believes that a static balanced approach to risk allocation may put investors at a disadvantage.
Investment Strategy Outlook 2Q 2017
Jeff Knight, Global Head of Investment Solutions, writes on the strong run of equity performance that we have seen, and considers the outlook for asset classes in the months ahead.
The Makings of a Commodity Bull Market
David Donora, Head of Commodities, notes that events in early 2017 have supported stronger performance from commodities, and that elements may be in place for a bull market in the asset class. Stronger economic growth in both developed and developing markets is increasing demand at a time when supply is constrained.
French Elections: What to Expect Should Le Pen Prevail
Mark Burgess, CIO, EMEA and Global Head of Equities, evaluates the impact on markets should Marine Le Pen win the French presidential election. The immediate reaction of markets is likely to be a spike in volatility.
What to Watch For From the Fed
Edward Al-Hussainy, Senior Interest Rate and Currency Analyst, The Fed concluded its March meeting with an expected announcement to raise rates. Here is what to watch for now.
Technology is Bringing Responsible Investment Into the Mainstream
Iain Richards, Head of Responsible Investment, EMEA, discusses how new technologies are helping to seamlessly integrate ESG factors into the portfolio research process.
Long March to Higher Interest Rates
We've entered a new global economic environment, where fiscal policy supplants monetary policy as an engine of economic growth. China will be watched as it shifts from an export production orientation economy to a domestic consumption oriented one.
Natasha Ebtehadj, Portfolio Manager, Asian Equities takes a look at Asian markets and their ability to withstand any potential changes to global trade dynamics that may result from the policies of the new American administration. She believes that, while not immune, Asian economies possess enough diversity to provide investment opportunities should significant changes be enacted.
Investment Strategy Outlook – Q1 2017
Jeff Knight, Global Head of Investment Solutions, and Anwiti Bahuguna, Senior Portfolio Manager, review 2016, and the pivotal 4th quarter, and provide their outlook for 2017 as the new U.S. administration settles in.
Watch: Investment Themes Update*
Toby Nangle, Co-Head of Global Asset Allocation, discusses the current landscape for global multi-asset investors.
Why Non-U.S. Institutional Investors are Investing in U.S. Municipal Bonds
James Dearborn, Head of Municipal Bond Investments and Senior Municipal Portfolio Manager and Kimberly Campbell, Senior Municipal Portfolio Manager look at the reasons that U.S. municipal bonds, historically favored by taxable U.S. investors, have attracted increasingly more interest from non-U.S. institutional investors.
Additional reading: Municipal Bond Outlook
Mr. Dearborn provides his review of the current environment for municipal bonds.
So Long, Bond Bull Market
We've entered a new era for fixed income, as central banks shift their attention from monitoring deflation risks to balancing the need for economic growth while keeping inflation in check.
Additional reading: Currencies Face an Uncertain 2017
As a new U.S. administration begins and the U.K. prepares to leave the European Union, Matthew Cobon, Head of Government and FX examines the landscape for currencies in 2017.
Emerging Markets in the Wake of the U.S. Election
Dara White, Anwiti Bahuguna, and Edward Kerschner provide insight into emerging markets and the effect the Trump administration may have on emerging markets.
Adaptive Risk Parity Q&A with Jeff Knight
Jeff Knight, Global Head of Investment Solutions, is featured in an interview with CIO Magazine on the subject of adaptive risk parity.
Toby Nangle, Head of Asset Allocation, EMEA, examines the collision of globalization and the growing strength of political populism we have witnessed over the last year.
Mortality Improvements: Less Costly for Pension Plans
Thomas Egan, Actuary, Liability Driven Investments, evaluates the potential for positive improvements on pensions’ funding status based on new mortality data recently released by the Society of Actuaries.
Q&A with Jeff Knight
Jeff Knight, Global Head of Investment Solutions, is featured in an interview with Pensions and Investments on the subject of adaptive risk parity.
Negative Interest Rate Policies
Maya Bhandari and Jeff Knight of Columbia Threadneedle Investments examine central bank policies and their efforts to stimulate their countries’ economies through the implementation of negative interest rate policies.