Quarterly Newsletter Articles
Investing using factor tilts in a portfolio can be done either to manage risk or to generate alpha. Factor investing has been identified as one of the most significant advances in investment management in the last 20 years. Bridging the gap between Active management and Indexing, Factors incorporate the best of both worlds: low cost, consistent methodologies with the opportunity to outperform broad benchmark exposures.
After a tumultuous first quarter in fixed income markets, credit investors may understandably feel caught between a rock and a hard place. Government yields are historically low despite a sudden spike in corporate spreads, bond inventory continues to be challenged, and central banks are raising their inflation targets based on expectations the recent stimulus and vaccine rollouts will spur an economic recovery.
The traditional 60/40 asset mix was conceived in the 1980s when interest rates were higher and life expectancy was shorter. Current low interest rates, however, have changed portfolio construction assumptions for all investors. Today’s portfolios have reduced allocations to bonds and increased allocations to equities.
It’s no coincidence that ETFs and RI are growing together because ETFs are cost-efficient delivery vehicles for RI strategies with several advantages over active RI solutions, especially for the Family Offices and Investment Counselling firms, who face scalability challenges.
Responsible investing (RI) has evolved tremendously over the past decade, moving beyond a stylish trend to represent a material structural change. Institutional investors worldwide are making more thoughtful decisions about capital allocation and investment managers have responded by adopting environmental, social and governance (ESG) practices into their fundamental processes. What does this integration look like across the various asset classes?