Asset Allocation & Strategy Papers: Jan 2021

Allocating Assets in the New Year – Top Recent Papers

This selection of top, recent Asset Allocation and Strategy content begins with a reminder of post-pandemic expectations and projections for capital markets over the next five to ten years. But forecasting can be tricky, especially when attempting to account for black swan events and other statistical outliers. CFA Institute Research Foundation provides a helpful guide on forecasting for models that account for both market-related and geopolitical events.

Though several other papers in the list take a sector-specific (or brief multi-asset view) at the likely outcomes for 2021, we have saved quite a few recently released yearly outlooks for an additional 'Outlook 2021' distribution in the near future. Also, as the present topic aligns perfectly with one of the categories from our recently announced 2020 Savvy Investor Awards, we've included a link to view both the winning and highly commended papers from that category.

TOP RECENT ASSET ALLOCATION & STRATEGY PAPERS

What to Expect after the Great Pandemic of 2020 (BNP Paribas AM)

Though constructed in mid-2020, the second half of this paper by BNP Paribas AM details return forecasts for principal asset classes over the coming five to seven years.

Long-Term Capital Market Expectations (Franklin Templeton, Dec 2020)

For compliance reasons, this paper is only accessible in the EMEA region

Franklin Templeton's capital market expectations cover a 10-year time horizon across all major asset classes. Alongside other insights, they describe the potential for lower performance for government bonds, but stronger performance from emerging markets over this time period.

Risk & Reward Q4 2020: The pace of innovation (Invesco)

For compliance reasons, this paper is only accessible in certain geographies

Invesco’s Q4 edition of their Risk & Reward magazine focuses upon the acceleration of innovation, via new inventions and digitalisation, both of which becoming increasingly critical to the investment management industry.

Five-Year Capital Market Assumptions (UBS AM, Dec 2020)

UBS AM's five-year capital market assumptions describe tempered expectations for dollar-denominated assets due to high present valuations. For global investors, the difference between hedged and unhedged projections is striking.

Geo-Economics: Rules of forecasting (CFA Institute Research Foundation, 2020)

Of particular interest in this publication are the author's 10 rules of forecasting, which can be applied both to geopolitical developments and market-related events.

The Battle of the Vs: Virus versus vaccine (QMA, Dec 2020)

This paper reviews a recent discussion of senior investment professionals at PGIM and QMA on the subjects of vaccine efficacy and the potential global economic rebound in 2021.

Towards a Healthier Tomorrow (Candriam, Dec 2020)

Candriam provides a breakdown of 2020 winners and losers, by region and sector, stressing the need for active management in 2021.

Is the Rotation Real? Multi-Asset Outlook 2021 (Wellington Management)

In this chartbook, Wellington Management provides a series of slides on the global economic outlook.

S&P 500 2021 Earnings Preview (FactSet, Dec 2020)

What's in store for S&P 500 companies in 2021? FactSet projects a rebound in revenues and earnings growth, led by the industrials, energy, and consumer discretionary sectors.

Does Rebalancing Still Make Sense? (Intech, Dec 2020)

For compliance reasons, this paper is only accessible in certain geographies

Intech details the merits of a systematic approach to portfolio rebalancing, using optimised stock weightings to actively diversify portfolio holdings and capture a rebalancing premium over time.

Ways to Improve Your Active Risk (AQR Capital Management, 2020)

AQR describes methods to improve a portfolio's active risk, particularly when it comes to reducing unintentional active risk exposures.

SAVVY INVESTOR AWARDS

Best Asset Allocation & Strategy Paper 2020 (Savvy Investor Awards)

The winner of the 2020 Savvy Investor Awards "Best Asset Allocation & Strategy" paper was Robeco. For more information about their paper, as well as the other Highly Commended papers recognised in the Awards, click on the link above.