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We don’t believe so. US small caps have benefited from cyclical tailwinds this year, including strengthening US growth and their more domestic orientation (helpful as the dollar strengthens and trade frictions increase), with small-cap earnings estimated to grow twice as fast as large-cap earnings in 2018.
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In short, no—their use isn’t going away any time soon. Rather than avoid them, incorporate new elements to more clearly assess the manager’s true investment skill.
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No, MSCI index inclusion will not trigger a bull market in Chinese A-shares.* Given the very modest initial weights and the lack of clarity on future increases, we doubt that index-driven flows will drive share prices meaningfully higher.
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Yes. Since fixed income derivatives are more capital efficient and flexible than physical bonds, they can play a key role in liability hedging for many corporate and other single-employer pension plans.
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Not in the United States. As short rates have increased and the yield curve has flattened, US T-bills offer more appeal than they have in some time (and short-dated Treasuries even more so).
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Not necessarily. Although we believe the announced tariffs are a negative for the global economy, recent market moves have probably more than baked in the pain they will cause.
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We don’t think so. Investors with allocations to energy MLPs (master limited partnerships) may want to maintain existing allocations, despite their recent poor performance and the proposed regulatory changes impacting interstate pipelines.
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Yes. Inflationary pressures in the United States appear to be building, as positively trending wages, expansionary fiscal policies, and protectionist trade barriers feed into a humming economy.
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Not in the near term. The current environment of rising, but low, interest rates accompanied by strong earnings growth expectations is supportive for equities.
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No. The US public equity market remains the largest and most liquid in the world and continues to offer a robust opportunity set for investors.
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