Global Strategy Outlook

The Risk of Losing Money in both Bonds and Equities (Sep 2016 Investment Outlook)

September Investment Outlook - best papers

Could investors lose money simultaneously in both bonds and equities? As interest rates creep lower and equity valuations extend further, the risk increases. How likely is this “double trouble” and what can investors do to protect themselves? A recent paper from Northern Trust seeks to answer this question, and has been very popular with Savvy Investor members.

Other selected “investment outlook” papers include an excellent paper from KKR, providing their thoughts on five current investment themes.

Bonds-Equities-Risk-City-of-London

The Risk of Losing Money in both Bonds and Equities (Northern Trust)
Investors have experienced three episodes of "double trouble" since 1945. What were the common denominators, and could this be replicated in 2016-2017? Northern Trust examines the macro outlook for these two major asset classes.

Global Macro Trends: Five Key Investment Themes (KKR, Sep 2016)
In this thoughtful 20-page document, KKR highlights five key macro themes, many of which they believe can perform against a variety of economic backdrops.

Monthly Investment Outlook from Bill Gross (Janus Capital, Sep 2016)
In his latest Investment Outlook, Bill Gross of Janus Capital argues that market manipulation by developed world central banks is harming the long-term state of capitalism.

The 2016 U.S. Election: All bark, no bite for markets (TIAA, Sep 2016)
Presidential elections have become all-consuming quadrennial affairs for print, television, and social media. And with this cycle being the longest (and arguably the most unusual) in history, many investors are concerned that the 2016 U.S. election will affect financial markets and, in turn, their invested wealth. So far, we haven’t found find many instances in which the 2016 campaign has swung markets one way or another. With two months to go until Election Day, it’s still possible for the race to change in a way that invites financial market volatility.

Downward Credit Migration: Worse Than You Think (Loomis Sayles 2016)
Are investors adequately rewarded for the credit risk arising from downward ratings migration? Why is credit quality so negatively biased? How should investors understand this structural trend and factor it into their investment process? Credit quality migration has important implications for investors in terms of their approach to portfolio construction and setting of fixed income benchmarks. The author, Chris Gootkind (Director of Credit Research and Credit Strategist at Natixis) examines the drivers of credit migration, whether it will persist, and how investors should respond.

The Fed Serves Notice From Jackson Hole (S&P Dow Jones Indices, Sep 2016)
Collectively, the Federal Reserve's FOMC would clearly like to restart the normalization of U.S. monetary policy. The question about whether the country's economy actually requires a tightening of monetary policy.

Shaking Off The Brexit Blues (Pictet, Sep 2016)
The MSCI Europe equity index and its U.S. counterpart are back to their pre-Brexit levels. That could be taken as a sign of investor complacency, though this paper argues that the moves are justified and should continue into the Autumn.

Is this the end of the 35-year bond rally? (Nikko AM, Sep 2016)
While market commentators are speculating that we are finally reaching the end of the 35-year bond rally, it's important to remember that we have heard similar suggestions many times before over recent years.

Is Yield Curve Flattening Coming to an End? (Fulcrum, Sep 2016)
The shape of the yield curve is already consistent with what has been seen in the past at the peak of the policy tightening cycle. How are we to assess these developments? What are the implications for global bond investors?

The Global Asset Management Industry 2016 (Boston Consulting Group)
This report by the Boston Consulting Group provides insights from a recent survey of nearly 140 leading fund managers representing over 55% of global industry AuM. It aims to give new insights into the state and outlook of the industry, specifically its main sources of profitability to help asset managers build a prosperous future.

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