Invesco Fixed Income shares its views of rates around the world.
Our analysis of three first-generation smart beta strategies shows factor-replicated portfolios are ineffective substitutes for their smart beta counterparts, exhibiting poorer performance, high turnover, and low capacity.
In this issue, Research Affiliates offers insight into its CPI-based secondary return benchmarks, its business cycle modeling and continued opportunities in emerging markets.
Invesco Fixed Income shares its views of rates around the world
In 2016, Research Affiliates published a series of articles challenging the “smart beta” revolution. We pointed out that, while there is merit in many factor tilt and smart beta strategies, performance chasing in these strategies—buying the popular outperforming strategies whose relative valuations are at extremely high levels—can be just as dangerous as performance chasing in other realms of asset management.
Interest rates have been on the rise since late last year as market participants correctly anticipated the Federal Reserve would move forward with interest rate hikes. As I write this, Government Long-Term Treasuries have lost over 16% since last July.
In December, the US Federal Reserve (Fed) raised interest rates, as predicted, and raised expectations for more increases in 2017. At Invesco Fixed Income, we believe one of the best ways to handle a rising interest rate environment is to have a portfolio diversified across different credit-related asset classes.
In a series of articles we published in 2016, we show that relative valuations predict subsequent returns for both factors and smart beta strategies in exactly the same way price matters in stock selection and asset allocation.
Based on the little substance that emanated from the presidential campaign, it is almost impossible to game the precise market and economic policy implications of a Trump presidency. What there is to guess at suggests possible gains for the financial sector, companies leveraged to infrastructure, and healthcare companies, should there be dramatic reform to the Affordable Care Act.
In their latest piece, Rob Arnott and Brandon Kunz of Research Affiliates take a look at how the rare combination of exceptional valuation levels, depressed currencies, and powerful price and economic momentum should encourage long-term investors to “throw their hats” into the emerging markets rink.