Active Management

Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.

Weighing the costs of global vaccine access, minimum wage and the energy rally.

Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.

Millions of Texans were without power this week when the state was hit with a record setting winter storm. An overhaul of its aging infrastructure would require massive amounts of metals and other materials, which would be positive for miners and producers.

BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.

It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.

New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.

A brief monthly update on what's happening in the municipal bond market.

• Tax-exempt municipal bonds generated solid performance in January, with high yield munis gaining more than 2% on the month.
• Municipal yields rose early in the month on expectations for higher rates and additional fiscal stimulus.
• Although issuance was relatively light in January, the municipal market experienced strong demand, with four consecutive weeks of fund inflows.

Emerging market equities have historically provided investors with outsized returns but have also been the biggest decliners during global equity market pullbacks. For the last 10 years they have lagged the performance of US Equity markets by a considerable margin. But with attractive relative valuations, higher earnings growth forecasts, and underrepresentation in global portfolios, we believe they are set to reverse that trend and outperform US markets over the next 5-10 years.

Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.

Rob Arnott: “There hasn’t been a better time to be a value investor at any other time in my career. I look back at the tech bubble and I never thought I would see valuations stretched the way they were then. We're back to that, and then some." We invite you to revisit “Reports of Value’s Death Have Been Greatly Exaggerated” now published in the Financial Analysts Journal.

Investors have parked record piles of cash on the sidelines amid concerns about valuations and volatility. But short-term safety comes at a price. By defining long-term goals, investors can put idle cash to work despite uncertainty about the path to recovery.

By buying or overweighting characteristics-based factor exposure and selling or underweighting beta-based factor exposure, investors can position their portfolios to reap the rewards of factor investing while bearing less risk.

This is a new type of exchange-traded ETF that is built differently from a traditional ETF.

Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.

It goes without saying that COVID-19 and the pandemic has been and is a terrible thing. People have gotten terribly sick and many have even succumbed to this horrible virus. Clearly, there is nothing good or positive that can be said about this scourge from a purely human or humanity perspective.

Fortunately, human behavior has a history of repeating itself at extremes. The worst buying decisions are made at the top. Just like bonds, the convexity is true when yields rise going forward. It’s a slippery slope and could be vexing.

At some point, interest rates will move higher. Advisors must understand the inherent risks, and proactively evaluate alternatives for their fixed income portfolios to manage through successfully.

It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.

The 4th quarter of 2020 began with tremendous anxiety and divisiveness around the Presidential election. Investment markets reflected that anxiety.

The GameStop drama that has rattled US stocks reflects the growing power of individual investors to shape market events. But there are lessons for traditional, long-term investors, too. When markets ignore fundamentals, redoubling a focus on quality is the best way to produce consistent returns while reducing volatility.

Cyclically oriented value stocks could make a comeback in 2021, yet there’s still a place for durable growers in a balanced equity portfolio.

Massive growth in central bank balance sheets via quantitative easing, debt monetization, and firing of “big bazooka” stimulus packages brings renewed focus to potential shocks in the business cycle. An awareness of the macroeconomic “shocks” and their impact on asset prices should be incorporated in investors’ tactical asset-allocation decisions.

The UK-EU trade agreement entered into just before Christmas is a 1,200-page monster which contains far more cons than pros for the British economy despite Boris Johnson doing his very best to convince the British public of the opposite. In this month’s Absolute Return Letter, you can see why.

Nothing so animates a speculative herd as a parabolic price advance in an asset detached from any standard of value. I am convinced that future generations will use the present moment to define the concept of a reckless speculative extreme, in the same way our generation uses “1929” and “2000.”

As inflows to sustainable equities break new records, here’s what investors should look for to identify portfolios that align with their responsible investing goals.

I’m often asked if I foresee inflation or deflation. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I would just like to have a growing economy and dependable money that holds its value.

The COVID-19 pandemic has expanded the universe of companies in financial distress, creating a buyer’s market for distressed debt funds.

Precious metals in general did very well in 2020, and I expect them to keep pace in 2021, supported by heightened efforts in the U.S. and elsewhere to transition from fossil fuels to renewable energy.

The Mortgage and Structured Finance Sector Team discusses key themes in the securitized market in 2021.

For all Millennial readers, if you visited a casino in your lifetime only to see your money quickly disappear, you have not seen anything compared to trading versus professionals. So to all you Robinhood traders I say, “Welcome to the Jungle.”

There have been a small number of consistent alpha-creating axioms in the U.S. stock market over time. Value beat growth over long time frames, tech stocks hit bottom in the summer and crowded trades separate you from your money, to name a few.

As expected, the new administration has hit the ground running. In his first two days in office, President Biden issued executive orders which rescinded a number of previous directives or were aimed at ending the pandemic and easing the pandemic’s economic impact.

In the years since the end of the gold standard, there’s been a significant lack of discipline in government spending. Today, the federal debt is closing in on an astronomical $28 trillion, which is more than 130% of the size of the U.S. economy.

The 2020s are going to be about rifle shots, not the shotgun approach of index funds.

Wall Street and Main Street are two different zip codes. In 2020, one neighborhood struggled with rising economic uncertainty, while the other posted strong gains underscored by a loose fiscal and monetary environment. In 2021, we expect the neighborhood's economic fortunes to converge.

The newly inaugurated President and Vice President of the United States are proposing much that will have significance for advisors interested in ESG and impact investing.

A holistic LDI portfolio may provide a superior liability hedge.

Our outlook for 2021 is formed by the need to get away from the crowd and to expect some very stormy weather in the U.S. stock market. We are not afraid of drowning. Therefore, we will review the circumstances at the bottom of the market in 2009 with today’s market to see where the crowd is and where we need to go to avoid the coming storm.

The speculative “V” is one of the most interesting and challenging features of the market cycle. For passive investors, it can be a period of exhilaration followed by panic.

2021 market outlook from BlackRock's municipal bond team.

A confluence of dynamics are set to accelerate global capital flows to emerging markets amid attractive valuations.

Emerging-market stocks rebounded in 2020 even as the COVID-19 pandemic spread globally. As vaccines and other favorable conditions unfold, investors have good reasons to consider EM equities in 2021 while strategically considering their potential risks.

Today we’ll begin by looking at new virus developments, some of which are good, some very good, and some frightening. We (the entire world) are in a very tight race with dire consequences if we lose.