Should You Avoid Commitment (Facilities)?
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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Will the Addition of Chinese A-shares to MSCI’s Global Indexes Trigger an A-Share Rally?
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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Should Fixed Income Derivatives Play a Role in Liability Hedging for Pension Plans?
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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Is Cash Still Trash?
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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Should Investors Reposition their Portfolios in Response to Recent Tariffs and the Rising Threat of Trade Wars?
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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Is it Time to Sell Energy MLPs?
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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Are Inflationary Pressures in the United States Building?
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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Should US Equity Investors Fret About Rising Yields?
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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Should Investors Be Concerned that the Number of Listed US Stocks Has Dropped by Half Since 1996?
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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With the Recent Surge in Volatility, Should Investors Modify Their Asset Allocation or Exit Systematic Strategies
No, most investors should sit tight. The persistence of strong corporate and macroeconomic fundamentals in the face of the recent sell-off and spike in volatility strongly suggests that the duration of the market rout should be limited.
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