The consumer price index (CPI) for January showed that core inflation held steady at a rate of 3.9% last month, a small setback in a trend of moderating inflation in the U.S. Healing in global supply chains and a rebalancing of the U.S. labor market have helped to dramatically tame inflation over the past year.
China's economy has disappointed most expectations over the past year. China's need to rebalance from investment to consumption is coming when tensions with the U.S. are elevated. This could create continued volatility. We believe China does have the levers to alleviate some key challenges.
When it comes to taxes, it's always best to be prepared for any future changes that could either benefit or hurt your clients. This year's inflation-related adjustments to tax brackets and standard deductions could give some of your clients more flexibility to manage their capital gains.
Chinese equities are extremely cheap and priced for bad news. We believe this environment may present opportunities for active managers.
Investors experienced a shift in global risk sentiment during Q4, marked by lower inflation and the anticipation of an end to the rate hiking cycle.
In February 2023, the Securities and Exchange Commission adopted rule amendments to shorten the standard settlement cycle to T+1 for transactions in U.S. securities including equities, corporate bonds, unit investment trusts, and exchange-traded funds.
The Monetary Policy Committee (MPC) vote in favor of keeping the Bank of England (BoE) policy rate at 5.25%.
In Russell Investments’ factor portfolios, the Global Large Cap Growth, Momentum and Size factors outperformed the MSCI All-Country World Index during Q4, while the Global Large Cap Value and Low Volatility factors underperformed the index. The Global Lage Cap Quality factor was flat for the quarter.
Many advisors wait until the end of the year to harvest tax losses, but that may not be the best policy. Stock markets frequently go up in the last two months of the year so better harvesting opportunities may be available at other times.
A renewed sense of optimism emerged during the fourth quarter, sparking an increase in U.S. equity trading volumes and a rally in risk-on fixed income assets.
More institutional investors are exploring infrastructure for diversification, income and stable return potential as well as inflation protection. Investors are looking at both the traditional segments and newer digital sectors along with renewables.
The fourth quarter of 2023 was a more favorable environment for active managers in the UK, Europe, Emerging Markets, U.S. Small Cap and Listed Infrastructure, while being more challenging for U.S. Large Cap, Global, Global ex-U.S., Japan, Australia, Canada, Long/Short and Global Real Estate managers.
When markets are volatile, it's tempting to move into cash. But those high yields on short-term cash instruments aren't as attractive once taxes and inflation are factored in.
There will be a lot of firsts for the economic history books if this business cycle can survive a labor market slowdown, 525 basis points (bps) of rate hikes and an extremely inverted U.S. Treasury yield curve.
Financial advisors are gearing up for a successful year and preparing for client reviews. We offer four actionable ideas and practices to help advisors address some key concerns many investors are having about the year ahead.
Institutional investors may want to consider an allocation to Quality equities as well as a sufficient allocation to government bonds.
We don't expect tensions between China and Taiwan to intensify this year, due to China's improving relationship at the margin with the U.S. and China's likely focus on domestic growth.
Initiate the year with direct indexing, encompassing tax planning, personalized investing strategies, rejuvenating sidelined cash, and navigating concentrated stock positions or financial windfalls.
While elections can be newsworthy, we think that investors shouldn’t be too concerned about the impact on financial markets. Staying disciplined will help investors in the long run.
Tax-loss harvesting is an essential tax-management strategy that can benefit a broad range of taxable investors – even those who many not think they have to worry about investment taxes.
Interest rates are one of the most important factors affecting the economy and the outlook for stocks. Managers increasingly think interest rates in the U.S. have likely peaked and are repositioning equity portfolios for the new environment.
We see both advantages and disadvantages to IBM's retirement program changes. One advantage is that more capital will be freed up for other corporate initiatives, while one disadvantage is that without a 401(k) match, participants may save less for retirement.
To be considered a best-in-class outsource trading provider, one must excel in many areas.
From the banking crisis to the U.S. debt-ceiling saga, from inflation concerns to recession fears, from soaring bond yields to slowing consumer spending, 2023 had no shortage of issues for investors to worry about.
When stakeholders convened at COP28, the 28th Conference of the Parties, from Nov. 30 to Dec. 12, it was with an unwavering acknowledgment of the real threat posed by climate change.
Private assets and alternative investments are usually illiquid in nature but can help an investor meet their long-term objectives in a more efficient manner.
Although cash donations are appreciated, donating securities may be more impactful for both the charity and the donor.
There's more to an overlay program than just cash equitization and systematic rebalancing. The flexibility of the program allows for several other exposure management strategies.
Macroeconomic uncertainty remains elevated. We believe a recession in 2024 is more likely than not. Non-profit hospital systems have faced significant operational pressures, and may continue to experience challenges in the near-term.
Funds will begin paying out their 2023 distributions this month which could lead to a tax bill for your clients. While capital gains distributions will likely be lower this year than in recent years, interest income is expected to be higher.
It’s possible that a 2024 recession could be avoided, but we see recessions risks as remaining elevated in most developed markets. We believe there is limited upside for equities amid expensive valuations and recession concerns. Government bond valuations, however, look attractive in the U.S., UK, Canada, Germany and Australia.
The global economy is still overwhelmingly powered by fossil fuels, with more than 80% of primary energy sourced from coal, oil, and gas, as of 2021.
Our 2023 Manager ESG Survey shows that transparency around DEI data is increasing among investment managers. The results reveal that equity product managers in particular are more inclined to share DEI data compared to managers in other asset classes.
97% of corporate defined benefit (DB) plans can achieve full funding without a significant draw on corporate cash. This is an increase from the 86% noted in last year’s report.
The main point under contention this year will be the phase-out of fossil fuels and the limited progress achieved so far. As more businesses make net-zero commitments, there is mounting pressure for greater government support through policies and incentives.
There is broad agreement that economic damages will increase with warming, but there is substantial disagreement on the magnitude of these damages.
As I start thinking about Christmas this year, I decided I want to be on the nice list again, so I put together some useful year-end actions and ideas for financial advisors.
While the fall in inflation is welcome, the impact of higher interest rates on mortgage borrowers still has some way to play out. The reduction in inflation will help DB members that are drawing on their pension. Pension trustees should consider their investment strategy and support members with their retirement planning.
Taxes can have a significant and ongoing impact on an investment portfolio. Advisors can help their clients minimize that impact with a tax-smart approach. Advisors can prepare for capital gains season now, and potentially maximize their clients’ after-tax returns.
Portfolios with large allocations to alternatives can have many benefits. However, alternative allocations can deviate meaningfully from policy, particularly during periods of equity-market turbulence.
Fossil fuels, particularly oil, are difficult to replace due to their availability, affordability and energy density. Low-carbon alternatives, like solar energy, need large amounts of space to produce comparable amounts of energy to oil.
We believe that an OCIO provider should have the capability to handle any type of investment assignment. However, most OCIO providers do not have the ability to do this.
Starting in 2024, IBM will replace its 401(k) plan matching contributions with a new benefit earned within its overfunded DB plan, which has been frozen since 2008. This move essentially un-freezes the tech giant's DB plan.
The third quarter was a more favorable environment for active managers in U.S. Large and Small Caps, Japan, Australia, and Canada equities, while being more challenging for Global, Global ex-U.S., Emerging Markets, Europe, UK and Long/Short managers.
Global investing is easily accessible through the financial markets. Many investors prefer to stick to companies and industries they are familiar with.
Investors should be aware of potential real-time market exposure risks when implementing large changes to their portfolios. One market hour of misaligned portfolio exposure can have a significant impact on your portfolio’s performance outcome for the year.
The direction of interest rates was the biggest factor moving markets in the third quarter. Sentiment on technology stocks appeared to shift. Money market assets reach historic high, but returns lag stock market.
In Q3, the strongest performance among factors was seen in developed ex-U.S. large cap and small cap and U.S. small cap, where Value outperformed by 4.9%, 3.3% and 3.3%, respectively. The weakest performance among factors was in U.S. small cap, where the Size factor underperformed by -2.4%.
Our 2023 Manager ESG survey reveals that while more investors are implementing engagement and proxy voting strategies, there is still room for improvement.
A transition away from fossil fuels is likely required to avert a significant warming of the planet. Rising temperatures could lead to crop failures, storm intensification, ocean acidification and deoxygenation, and infrastructure damage, among several other risks.
