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20 Top Papers from February 2021

Fiscal Stimulus, The Fed, and Inflation

As negotiations begin in earnest about the size of the U.S. fiscal stimulus bill, some commentators envisage increasing market volatility should the U.S. Fed appear more hawkish on recovery prospects.

Our February selection of top investment content explores a range of topics, including the impact of demographic change on inflation and how UK investors might mitigate a spell of negative rates. The use and interpretation of ESG data and its impacts are explored in some detail. Finally, for those of you who may have missed it, the latest iteration of the Savvy Investor Quarterly Salary Surveys is also out!

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How to Improve Low Volatility Factor Investing Outcomes (Intech, 2021)

For compliance reasons, this paper is only accessible in certain geographies

Low volatility factor investing may be back in vogue as a response to funding deficits and to markets being at all-time highs. Intech investigates how removing some constraints based on MSCI Minimum Volatility Indexes may allow active managers to add value via volatility reduction, downside protection, and alpha generation.

IFI Multi-Sector Asset Allocation Outlook (Invesco, Jan 2021)

For compliance reasons, this paper is only accessible in certain geographies

Invesco’s Multi-Asset Allocation Outlook suggests a strong rebound in growth in 2021, with inflation contained through the medium term, and global financial conditions remaining supportive of markets.

ETF Transactions by U.S. Insurers in Q3 2020 (S&P Dow Jones Indices, Jan 2021)

S&P Dow Jones Indices presents their latest analysis, taken during Q3 2020, of how US insurance funds use ETFs to flex exposure to and away from asset classes.

Non-U.S. Investment in Taxable U.S. Municipal Bonds (Franklin Templeton, Feb 2021)

For compliance reasons, this paper is only accessible in the EMEA region

Franklin Templeton argues that with low yields dominating the investment scene, particularly in Europe and Asia, non-U.S. investors should consider allocating assets to U.S. municipal bonds.

Are Demographics Deflationary? (Man Group, 2021)

Man Group delves into the implications for inflation of an ageing population and highlights some surprising findings.

2021 Investment Insights – Making sense of a market transformed (Wells Fargo AM)

For compliance reasons, this paper is only accessible in certain geographies

In this Investment Insights publication, Wells Fargo Asset Management postulates what the new, post-pandemic ‘normal’ might look like. They debate whether the longer-term ramifications of the pandemic are likely to be seen as good or bad.

Economic Outlook: Light at the end of the tunnel (QMA, Feb 2021)

QMA contrasts this Covid-19-induced recession, in which the service sector took much of the strain due to the imposition of behavioural change and public health responses, with those of previous recessions where manufacturing was front and centre.

European ABS: 2020 review and 2021 outlook (M&G Investments)

For compliance reasons, this paper is only accessible in certain geographies

M&G Investments looks back at key events in the European ABS market in 2020, and provides an Outlook for 2021, which they see being dominated by issuance.

Wealth Inequality: Seeking ways to lift more boats (PGIM Fixed Income, Feb 2021)

Wealth inequality, and how to address it, seems to be one of the top policy agendas for governments in the post-pandemic era. PGIM Fixed Income looks at what this may mean during a Biden administration in America.

The ESG Opportunity for Corporate Directors (State Street, 2021)

As ESG issues become more important drivers of long-term value, corporate directors need to embrace ESG oversight as a way to enhamce company performance. At the recent National Association of Corporate Directors event, Ron O’Hanley, State Street's chairman and CEO, presented five key questions for corporate directors to consider when it comes to ESG oversight. Ron offers guidance on how to identify, measure, and report on the ESG issues that matter most to a company’s long-term value and resilience.

PGIM Megatrends: Weathering Climate Change (PGIM, Feb 2021)

This new Megatrends paper from PGIM considers the implications of climate change, the hidden portfolio weaknesses that exist, and the opportunities that might be created as we transition to a lower-carbon world.

Sustainability Yearbook 2021 (Robeco)

The Sustainability Yearbook is THE reference guide to how many of the world’s largest companies score when subjected to in-depth ESG scrutiny. In addition to individual company data, the Yearbook contains articles about several key sectors and industries integral to a lower carbon economy.

Rethinking Fixed Income in DC Plans (Wellington Management, Feb 2021)

Wellington Management suggests how a bespoke, multi-manager solution for a bond allocation may provide benefits for both plan sponsors and participants alike.

UK Investors: Prepare for negative interest rates (T. Rowe Price, Jan 2021)

For compliance reasons, this paper is only accessible in certain geographies

In this interesting and dissonant piece, T. Rowe Price suggests that UK investors should actively consider a period of negative rates and how this might impact portfolios. Strategies to mitigate such effects are suggested.

Global Data Centres: A niche sector gets connected (PGIM Real Estate, Feb. 2021)

PGIM Real Estate looks at the key metrics for the global data centre sector and suggests that based on current trends the sector is still expected to produce significant growth in the next few years.

Covid-19 and Smart Beta: The role of sectors (EDHEC-Risk Institute, 2021)

This paper from EDHEC-Risk Institute investigates how sector performance affected smart-beta products during the Covid-19 meltdown. They suggest that excess returns vs a cap weighted portfolio were driven by a unique Covid-19 industry rotation, rather than structural causes.

Webinar: How deeper data impacts ESG investing (S&P Dow Jones Indices, 2021)

In this podcast, experts from S&P Dow Jones Indices discuss the impact of ESG scores on index construction and risk/return.

The Market Will Test the Fed – The Fed will win (UBS AM, Feb 2021)

UBS AM suggests that financial markets may become more volatile as markets fret about the scale and scope of interest rate hikes should the Fed become more bullish about economic recovery.

Will Biden play ‘two-step chess’ on policy? (PineBridge Investments, Feb 2021)

PineBridge Investments examines how the federal assistance package might need to be adapted to pass a Senate vote, as the final size of the spending bill will largely determine future policy.

Salaries in the Asset Management and Pensions Industries (updated Q1 2021)

The Savvy Investor Content Team curates the latest in its series of Quarterly Salary Surveys. This survey is a handy reference guide to benchmark salaries across various roles in the investment industry.

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