Portfolio

The wall of maturities for Office and Multifamily Real Estate is upon us. The impact of rising interest rates is also being felt by Private Equity and Venture Capital. The difficulties faced by smaller US banks is providing further tailwinds to Direct Lenders. Hedge Funds will benefit from a more volatile backdrop over the next 1-2 years. Now is the time to resize Crisis Risk Offset portfolios.

MacroQuant is overweight equities, underweight bonds, and neutral cash.

Aggressive monetary tightening has always led to recession, although the timing is uncertain. The effects of high interest rates are starting to be felt. Investors should stay risk off and buy government bonds as a safe haven investment with carry.

Informe especial

We do not see a 1990s type of backdrop but we do see a departure from the 2010s. Structural forces make it unlikely that we will return to the 1990s heydays for LSE. However, evolving cyclical forces provide tailwinds over the next market cycle. In this Special Report we provide a quantitative assessment of what investors can expect.

Informe especial

In this update to the two Special Reports on FX hedging of global equity portfolios with nine different home currencies, published in 2017, we show that BCA’s proprietary dynamic FX hedging strategies have consistently added value to global equity portfolios. We value quant models as an important input in our decision-making process, but we do not suggest any investor to slavishly follow them, because models cannot capture all the important fundamental changes, as demonstrated in the details of this report.

MacroQuant is overweight equities, underweight bonds, and neutral cash.

A global recession continues to be likely over the next 12 months. The impact of tighter monetary policy is slowly being felt. Government bonds look increasingly attractive as a safe haven.

Informe especial

A global portfolio is likely to return only 5.3% a year over the next decade, compared to 6.7% in the past. Investors either need to lower their return expectations, or take more risk. Our total return methodology remains consistent with previous editions, with changes limited to the Alternatives section.

MacroQuant is overweight equities and cash and underweight bonds.

History suggests that a “soft landing” is highly unlikely after such an aggressive Fed tightening cycle. The rally could continue for a little longer but, on the 12-month horizon, market risks are very skewed to the downside.