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The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.
IT’S HARD TO BELIEVE WE ARE ALREADY INTO THE FOURTH QUARTER OF 2021. Planning for the next fiscal year has begun in earnest, with insurers across the globe considering the optimal positioning of their investment portfolios heading into yet another year end of heightened uncertainty that could spill over into 2022. As always, we believe that a laser-like focus on fundamentals, while leaving “no stone unturned” in the search for opportunities, should serve as the proverbial guiding light for insurers and other asset allocators.
The path of the COVID-19 pandemic, ongoing for a year and a half now as of this writing, remains key to the global economic outlook, and what we’ve learned about it since last quarter isn’t particularly promising: Additional variants of the virus are possible (and potentially more transmissible and virulent), vaccine-induced “protection” from it could wane over time, and a significant percentage of the global population remains unvaccinated.
This sobering new reality is reflected in reduced economic activity, the resurgence of growth stocks over their value counterparts, and a return to record lows for long-maturity yields in recent months (see Figure 1 in PDF available below). On a more positive note, global growth is still relatively strong overall, most economies are unlikely to go back into “lockdown” mode, and monetary and fiscal stimuli remain largely supportive. All of this leaves markets caught between two hard-to-reconcile narratives: The pace of economic growth seems poised to slow, but the level of growth is likely to remain above par for the foreseeable future.
Against this somewhat conflicted backdrop, we continue to maintain a pro-risk investment stance, generally favoring equities over high-yield credit for insurers’ surplus investments in the public markets. But relative to last quarter, our optimism is tempered to some degree by a subtle downgrade to our macro and policy outlook — including the potential for…
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Unlocking investment value in a 3D world
Co-Head of Multi-Asset Strategy Nick Samouilhan explains why focusing on the “three Ds” of divergence, dispersion and disruption could help to uncover investment opportunities while strengthening portfolio resilience.
Exploring active opportunities amid continued regime change
Head of Multi-Asset Strategy, APAC, Nick Samouilhan highlights the importance of focusing on high-quality, well-run companies amid increasing dispersion; diversified regional allocations amid greater divergence; and the disruptive implications of AI.
Income: the hard worker in your portfolio deserves more credit
Income from cash is good but income from bonds is better. In a less certain macro environment, Nick Samouilhan thinks the case for income only gets stronger. How can investors make the most of the opportunities?
Chart in Focus: Income investing is not just about “chasing yield”
Higher yield doesn’t necessarily mean higher total return. What are the trade-offs investors need to be aware of when looking for income?
On to the next crisis: Glimpsing a post-SVB world
Amid the turmoil in the US banking sector, Global Investment Strategist Nanette Abuhoff Jacobson suggests investors consider pivoting to a “risk-management mode” that favors higher-quality assets. (Published 14 March 2023)
SVB collapse: What are the implications?
Multi-Asset Strategist Supriya Menon shares her latest perspectives on the collapse of Silicon Valley Bank Financial Group (SVB) and the unfolding implications for investors. (Published 14 March 2023)
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