Five Multi-Asset Strategies for 2020’s Challenges
The last decade produced great performance across most asset classes. But in the 2020s, we expect investment market returns will be lower and risk harder to manage. Looking forward, a disciplined multi-asset approach will be especially valuable to identify opportunities and help mitigate setbacks.
Are Low-Volatility Stocks Too Expensive?
Even as global stocks climbed in 2019, market volatility persisted. By some measures, lower-volatility stocks now look quite expensive. But in fact, high-quality stocks that can help protect portfolios can be found at reasonable prices, if you know where to look.
The Phase-One US-China Trade Agreement: Cease-Fire, Not Peace Treaty
The US and China formally signed a phase-one trade deal Wednesday after several months of negotiations. We see the deal as a near-term positive for markets—but it also leaves the thorniest issues between the two countries unresolved.
Fixed Income Outlook: Keep an Eye on Systemic Risks in 2020
With bond yields near record lows, can fixed-income markets generate solid returns in 2020 without forcing investors to take too much risk? From a fraught geopolitical landscape to a global slowdown, we assess today’s biggest challenges—and opportunities.
Equity Outlook: Between Optimism and a Hard Place in 2020
Global stock markets rallied in 2019, defying political and macroeconomic uncertainty. Will investors be as fortunate in 2020? Since many risks remain, maintaining style diversity and finding investing themes that are detached from volatility drivers will be important ingredients for equity allocations.
Lifetime Income: Weighing Costs vs. Benefits
With the likely passage of the SECURE Act within the new government appropriations bill, annuities will gain safe harbor protections. This—and presumed cost concerns—has been a sticking point making some plan sponsors hesitate to offer a lifetime income solution in their defined contribution plans.
Three Possible Paths for Fed Interest Rate Policy in 2020
The US Fed held rates steady in December and plans to continue that stance through 2020. But a lot can happen to change the Fed’s mind—after all, it entered 2019 expecting to hike rates and ended up with three cuts. What does 2020 have in store?
Investing in Chinese Stocks After the Trade Truce
Now that the US and China have agreed to begin easing trade tensions, the fog over China’s markets is starting to lift. Investors should consider Chinese equity opportunities that have been overlooked because of tariff fears.
The Phantom Metric: What Really Drives US Equity Valuations?
Investors continue to question whether US equity valuations are too high, particularly for growth companies and versus other global markets. But standard valuation metrics don’t tell the whole story. Understanding the cost of capital can provide essential insight on valuing stocks.
For Growth Stocks, Profits Are the New Normal
After a series of disappointing initial public offerings (IPOs), private and public equity investors are becoming more discerning about earnings. And for good reason. Profitable companies outperform by a wide margin over time, even among high-growth companies, which often post losses early in their lifecycles.
Four Reasons Investors Shouldn’t Shy Away from Illiquid Alternatives
Many investors are somewhat skittish about illiquid alternatives because they’re worried about tying up their money for a long time in an investment that they can’t trade or exchange easily. However, illiquidity may actually work to investors’ advantage.
Big Tech Faces Big Test on ESG Issues
As big tech and media companies face growing concern about the power of their businesses, more questions about environmental, social and governance (ESG) issues are likely to be raised. Social and governance issues deserve greater attention amid increasing regulatory scrutiny of industry giants.
Energizing Europe: Regional Markets Show Signs of Recovery
European stocks have outperformed US equity markets in recent months, after several years of underperformance. Is this the start of a longer trend? It’s too soon to say, but some unfolding developments could signal a reversal of fortune for a long-unloved asset class.
Fed Next Steps: What’s Likely, What’s Not
The Fed has signaled it is unlikely to cut interest rates again in December, but we expect further rate cuts next year. We believe the Fed has not yet done enough to protect the economy against headwinds. While we don’t forecast a US recession, we think additional monetary policy easing will be needed to stabilize growth.
In a Post-Cycle World, Earnings Growth Is King
Investors are increasingly asking whether the macroeconomic growth cycle still exists, and, if so, where are we in it? The answers to these important questions have real implications for the way equity investors should think about their portfolios.
Are Private Equity Blowouts Good for Stock Investors?
There’s growing evidence that private equity markets are beginning to overheat after several high-profile IPO flops. Investors in stocks should pay attention because private funding troubles are also a very public market affair.
Four Signals that Could Point to a Bigger Value Rebound
US value stocks staged a strong recovery in September after an extended period of underperformance. While value slipped again in early October, we’re monitoring four signals that might indicate whether we’re on the cusp of a bigger value rebound.
Muni Investors: Listen to the Market
The market is moving very quickly. I can’t say that there’s one aspect that we’re looking at, but one thing I will tell you that I do believe is that we’re a Tweet away from—fill in the blank. It’s just the world that we’re living in at this point.
Five Lessons Packaged Target-Date Solutions Can Learn from Customization
As defined contribution (DC) plan sponsors know, the US Department of Labor recommends considering both packaged and custom target-date strategies when choosing a solution. As we see it, packaged solutions can learn a few things from fully customized target-date solutions, which are generally used by large and megasize plan sponsors.
Illiquid Investments: Getting the Formula Right
Alternative investments have the potential to enhance portfolio returns and reduce risk, but it isn’t easy to determine which alternative works best—and how much of it to own. To get accurate answers, it’s necessary to look beyond traditional asset-allocation approaches.
Will Municipal Bonds Continue to Deliver?
Despite the municipal market’s strong year-to-date rally, an aging US expansion and low yields continue to top municipal investors’ concerns as we enter the home stretch of 2019. When conditions are evolving and visibility is limited, active and flexible strategies can help balance risk and reward.
Global Equities: Keeping Balance in a Wobbly World
Global stocks advanced in the third quarter, but investor sentiment wobbled amid puzzling signals on macroeconomic growth and monetary policy. Political uncertainty and a cloudier outlook point to more volatility, which should compel investors to intensify their focus on stock fundamentals.
Is The Brexit End Game Finally In Sight?
As the People’s Republic of China (PRC) celebrates its 70th anniversary, manufacturing data shows that factories in the world’s second largest economy improved marginally in September, despite the impact of the ongoing U.S.-China trade war.
How to Invest in Technology As Regulators Defang Giants
US state attorneys general recently stepped up their scrutiny of big tech’s business practices. With corporate mammoths likely to be in the crosshairs of regulators for some time, equity investors should consider looking beyond the titans for opportunities in the sector.
Choosing Better Investing Ingredients for a Turn in the Cycle
What sources of market returns can withstand late-cycle uncertainty? By identifying the right ingredients, we think investors can create an allocation with the potential to overcome new challenges and perform well over the long term.
Out of Balance? Growth vs. Yield in US Stock Valuations
In today’s highly uncertain market environment, investors in US stocks are paying a premium for companies with high-dividend yields. But how much is too much—especially if interest rates stop declining? Stocks with resilient high-growth profiles deserve a closer look.
To Hedge or Not to Hedge? With Currency, It’s a Vital Question
With global markets growing more volatile, we’re often asked what we think are the most underappreciated risks that investors face today. One in particular stands out: currency risk—especially for non-US dollar–based investors.
Selecting Insurers for Lifetime Income: Help Is on the Way
When it comes to implementing a secure lifetime income solution for a defined contribution (DC) plan, sponsors may balk at the task of evaluating insurers and different types of retirement income options. But fiduciary help is already available, with additional services and innovations on the way.
Income Investing When (Trade) Tensions Run High
Trade tensions—and the volatility they bring—are forcing investors to think about new ways to generate low-volatility income. A mortgage income strategy that balances high-quality securities with historically high-returning ones can help.
Washington Helps Retirement Plan Quest for Secure Income
Washington legislators have crafted some substantive support for defined contribution (DC) plans to offer secure income solutions for participants. The Secure Act, currently under Senate review, may be a key component in clearing away some hurdles that have previously made DC plan sponsors hesitant to incorporate lifetime income solutions.
Does Your Target-Date Glide Path Suit Your Workforce?
Plan sponsors evaluating packaged and custom target-date solutions should take a close look at the demographics of their plan participants and how they stack up against those of a “typical” plan. It’s critical information when making a glide-path decision.
Three Ways to Manage Fixed-Income Liquidity Risk
Liquidity risk grabbed headlines this summer on the heels of several high-profile fund implosions. The hunt is now on to find ways to manage market liquidity risk and to protect portfolios against liquidity crunches. We’ve pinpointed three essential practices.
Why EM Corporate Debt Deserves a Place in Your Portfolio
Investors recognize that emerging markets are at the core of the global economy and belong in a fixed-income allocation. Still, many investors are underexposed to emerging-market corporate bonds. We think that’s a mistake.
Investors Can Hold US Companies Accountable to Roundtable Pledges
Leading US CEOs recently pledged to redefine the role of the corporation in society. But will they make good on their promises? Responsible investors need a clear way to evaluate whether a company is really making progress by doing good for both society and investors.
Are Distressed Small Banks Putting China’s Banking System at Risk?
It’s been 20 years since a Chinese bank failed. But recent bailouts of three regional lenders have raised concerns about systemic problems in China’s financial sector. While risks have grown for China’s smaller banks, we believe that the Chinese banking system remains robust.
The Investor’s Survival Guide to a Long Life
Rejoice—people around the world are living longer! But pause the festivities—that means they need more retirement money. To ensure they don’t run out of cash, savers need to adjust their investment strategies as their needs change, both before and after retiring.
Why Today’s Inverted Yield Curve Isn't Necessarily a Recession Warning
The most closely watched part of the US yield curve inverted this week for this first time since 2007, suggesting that a recession may be around the corner. We’re not convinced that’s true.