Commentary

Five Reasons EM Are More Resilient Than in the Past

In a new white paper, the GMO Emerging Markets Equity Team argues that Emerging Markets in aggregate are more resilient today than in prior periods, an important consideration as investors evaluate the rebound the asset class has experienced since late March.

Commentary

No Need to Bank on a Rebound

The pandemic has created an extraordinary risk/return trade-off for the shares of high quality U.S. banks. We believe there is the potential for decent returns for bank investors without improvement in the current environment, and the potential for enormous returns if the rate of change in the economy remains positive.

Commentary

1Q 2020 GMO Quarterly Letter

In a new quarterly letter to GMO clients, Ben Inker, head of asset allocation discusses the current uncertainty over the market and economic outlook and the decision to significantly reduce net equity exposure in the GMO Benchmark-Free Asset Allocation Strategy. Alongside Inker’s letter, Jeremy Grantham writes in “The Virus, The Economy and The Market” ...

Commentary

Introducing ‘Stressed Performing Credit'

In a new white paper, GMO Credit Opportunities Strategy co-PM Jeff Friedman looks at the Federal Reserve’s unprecedented actions in the corporate credit market amid the COVID-19 pandemic and highlights an area of the market where investors might capture attractive opportunities.

Commentary

GMO 7-Year Asset Class Forecast: 1Q 2020

The GMO Asset Allocation team has released its latest 7-Year Asset Class Real Return Forecasts through the first quarter of 2020.

Commentary

COVID-19 – Risk and Resilience in EM

In a new white paper from GMO’s Emerging Markets Equity Team, Amit Bhartia, Tiger Tong and Uday Tharar examine vulnerabilities and opportunities in emerging markets as the COVID-19 pandemic continues to threaten lives and economies around the world.

Commentary

It's Always Darkest Before the Dawn

In a new white paper from GMO’s Asset Allocation team -- "It's Always Darkest Before the Dawn" -- Ben Inker, Catherine LeGraw, John Pease and John Thorndike examine the three phases of bear markets against the backdrop of the current market environment.

Commentary

Shelter In Credit

Jon Roiter reflects on a wild ride in the high-yield credit market and whether now is the time to capitalize on attractive investments in the space.

Commentary

Fear And The Psychology Of Bear Markets

While it is, of course, a cliché to say that markets are driven by fear and greed, like many clichés this one contains a strong element of truth. The bad news for us humans is that within our brains, emotion appears to have primacy over cognitive function. While this may well have kept us alive and allowed our species to thrive, this uncomplicated hierarchy doesn’t necessarily work in our favour when it comes to thinking about financial markets.

Commentary

An Update on the Current Environment Amid COVID-19

GMO’s Ben Inker discusses the recent turmoil in financial markets and the firm’s perspective on valuations amid the sharp declines in many asset classes.

Commentary

Memo to the Investment Committee: Dare to Be Different

The conventional 60/40 portfolio of today is not going to generate the kind of returns that investors say they need. Investors must seek to embrace the terrifying concept of being different. As the ghosts of many great investors past have amply demonstrated, being different is the path to investment success. However, such advice falls into the simple but not easy category, to borrow Warren Buffett’s expression.

Commentary

60/40 Portfolios Face Double Trouble Ahead

While the passive balanced portfolio (60% stock/40% bond) has outperformed more diversified allocations over the last decade, we believe investors should temper their expectations for a repeat. Two key problems lie ahead for such a portfolio.

Commentary

GMO 7-Year Asset Class Forecast January 2020

Our forecasts for stocks generally improved in January as stocks declined, but they fell for bonds as rates rallied. Coronavirus and growth fears weighed on markets, pushing Value and non-U.S. stocks down most.

Commentary

Chemical Toxicity And The Baby Bust

In today’s society people are choosing to have fewer children, and delaying having children at all into later, less fertile years. These two factors have driven fertility rates below replacement level in most of the world, but a crucial third factor gets little attention and is having a profound impact on fertility: toxicity. The economic and social ramifications will be severe.

Commentary

How Higher Ratings Are Changing Emerging Debt

By moving our USD emerging debt strategy benchmark to the diversified (issuer-capped) version of J.P. Morgan’s EMBIG benchmark, we will limit our exposure to the ballooning issuance of low-return-potential, opaque countries. Our objective is to retain the “high dividend sovereign equity” nature of this asset class for our investors...