The Asset Allocation Channel

Asia on Sale

As Russ notes, in a world with few bargains, one stands out: Asia.

Of Currencies, Trade and Other Clouds

Emerging markets have struggled in the first half of this year amid a storm of uncertainties. Franklin Templeton Emerging Markets Equity’s Chetan Sehgal examines issues that have acted as clouds on the asset class—including a stronger US dollar and trade skirmishes...

July 2018 Market Commentary

Stocks hit the ground running to start the second half of 2018.

NFIB Small Business Survey: "Small Business Optimism Index Nears Survey High in July"

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for July came in at 107.9, up 0.7 from the previous month and its second highest of all time. The index is at the 100th percentile in this series. Today's number came in above the forecast of 106.9.

Weighing the Week Ahead: Don’t Get Framed!

The market remains in a narrow trading range, near the record highs. There have been some relatively minor leadership changes. This reflects not investor complacency, but intense disagreement about how to interpret data and events. Each viewpoint has a history, a philosophy, and problem something to sell!

Second Hand News: Facing a Second Derivative Economic Inflection Point?

This report may end up being the first in an ongoing series. I think of it as a “look inside my notebook,” as it literally represents a synopsis of the recent notes I put together for our latest Asset Allocation Working Group meeting. These represent a number of budding risks for the economy with which the markets are grappling. There are offsetting positives of course, but let’s leave this report to a look at some of the possible negatives.

The Race of Our Lives Revisited

In a new white paper on GMO’s website, Jeremy Grantham updates his discussion of the threats posed by climate change, population growth and increasing environmental toxicity, and his perspective on the role investors can play in combating these threats. In “The Race of Our Lives Revisited” Grantham summarizes the current state of affairs and the likely impact on the future ability to feed the 11 billion people projected to live on Earth by 2100.

Why Emerging Market Stocks Are Looking Cheap

As Russ explains, dismal performance of emerging markets this year has make them look like a bargain again.

Income Strategy Update: Sifting Global Change for Investment Opportunities

Portfolio managers Dan Ivascyn and Alfred Murata discuss the impact of higher market volatility and how they are positioning the Income Strategy for change ahead.

All Asset All Access, August 2018

In this issue, Research Affiliates discusses positioning in emerging markets and why investors should care about the distinction between real and nominal returns.

Emerging Markets—No Reward Without Risk

Emerging equities are more volatile than developed market equities. This owes little to the volatility of emerging stock markets in local terms and much more to the strong positive correlation between their local stock markets and movements in their currencies. The spring of 2018 was a classic example of this, with US dollar strength driving significant emerging weakness.

The Game-Changing Potential of Blockchain Technology

Over the past year, it’s been next to impossible to avoid a conversation or news story on bitcoin. It went from a relatively arcane subject to possibly the most discussed topic within financial markets across both Wall Street and Main Street.

The Elephant in the Smart-Beta Room

Industry experts make compelling cases for smart-beta strategies. Rarely, however, do they address the elephant in the room: costs.

Vanguard’s Research on Global Fixed-Income Allocations

Vanguard’s researchers looked at the global, investment-grade, fixed income landscape and quantified the diversification benefits of reducing local-market-specific risk factors. They also explored the factors that can influence sizing a hedged global bond allocation, such as home-bias considerations and the potential for reducing volatility.

Rebalance or Rush Hour?

Embracing a disciplined approach to rebalancing can lead to better long-term investment outcomes. Overcoming the natural tendency to wait-and-see before repositioning our portfolios can be a difficult, but worthy, goal for investors to pursue. Advisors can help investors surmount this and other behavioral hurdles by adopting a systematic rebalancing approach that effectively institutionalizes contrarian investment behavior.