Top Papers from March 2021
Investment Strategy in the New Normal
Here we present some of the top white papers to appear on Savvy Investor during the month of March. Given the range in topics, we've divided the content into several sections.
From studies of asymmetric correlations to reports on sovereign green bond issuance, there's something for everyone. Be sure to note McKinsey & Company's in-depth look at consumer demand, as well as Thinking Ahead Institute's iconic Top 100 Asset Owners report, which details the characteristics of their $20.1 trillion AuM.
PORTFOLIO ANALYSIS
Is Diversification a Myth? (State Street, 2021)
Correlations are asymmetric, making them complex to analyse. State Street illustrates how a full-scale optimisation process can take advantage of these asymmetries to lessen portfolio risk.
Do Not Give Up on Fundamental Valuations (Amundi, 2021)
For compliance reasons, this paper is NOT accessible in the United States
Some believe that equity valuations have now reached levels so extreme that they have diverged from economic reality. However, Amundi Asset Management describes three additional pillars of analysis that can be added to a traditional, fundamental approach to deliver further layers of insight for investors.
INVESTMENT OUTLOOK
Global Investment Outlook - Spring 2021 (RBC GAM)
For compliance reasons, this paper is only accessible in certain geographies
This 72-page quarterly update from RBC GAM's Investment Strategy Committee provides an overview of economic forecasts, currency markets, global equities, and global fixed income.
Pleasant Recession, Unpleasant Recovery (T. Rowe Price, Mar 2021)
For compliance reasons, this paper is only accessible in certain geographies
Nikolaj Schmidt, Chief International Economist at T. Rowe Price, discusses the abnormal recovery from the coronavirus pandemic, its impact upon household balance sheets, and potential risks on the short to medium-term horizon.
PENSIONS, RETIREMENT, AND ASSET OWNERS
Options for Delivering Retirement Income (Wells Fargo AM, 2021)
For compliance reasons, this paper is only accessible in the United States
Wells Fargo Asset Management discusses the pros and cons of pairing a multi-asset portfolio with a qualified longevity annuity contract (QLAC) in order to generate retirement income.
ESG in DC Pensions Report (LGIM, 2021)
For compliance reasons, this paper is NOT accessible in the United States and Canada
This 72-page report looks at the ESG and responsible investment trend within the UK defined contribution pension market, specifically examining asset managers that are active in the auto-enrolment market.
Pension Plans’ Top Priority: Optimising portfolio construction (Nuveen, 2021)
A factors-first approach to portfolio construction may be a more optimal approach than corporate pension plans are currently utilising, regardless of their funding level. Here, Nuveen elaborates on this approach and the identification of the relevant factors.
Top 100 Asset Owners: Influential capital (Thinking Ahead Institute, 2021)
This iconic study from Thinking Ahead Institute provides data about the AUM of the top 100 global asset owners and the allocation of these assets. This amounts to over $20.1 trillion as at the end of 2019.
INVESTMENT STRATEGY IN THE NEW NORMAL
Cross-Asset Correlations in the Corona Crisis (Qontigo, 2021)
Qontigo analyses the interactions of asset class pairs during the coronavirus crisis of 2020, looking at the impact of exogenous events on correlations over the past year.
Style Bias and Active Performance (S&P Dow Jones Indices, 2021)
This paper takes a unique approach to performance analytics looking at the peculiar years where most active managers outperformed their style benchmarks.
Consumer Demand and Lasting Effects of Covid-19 (McKinsey & Company, 2021)
How has consumer spending changed since the onset of the pandemic? For this insightful analysis, McKinsey & Company looks at consumer demand within five countries, dividing consumers into nine different segments.
Value Investing: Capitulation or opportunity? (BNP Paribas AM, Mar 2021)
At the end of 2020, the value-growth spread had reached its highest level since the dot-com bubble of 1999-2000. Unsurprisingly, BNP Paribas Asset Management recommends that value investors should stay the course.
Inflation: The devil we knew (Franklin Templeton, Mar 2021)
For compliance reasons, this paper is only accessible in the EMEA region
Fiscal stimulus, a very accommodative Federal Reserve, and an economy rebounding from 2020 lows could spell an inflation surprise in the U.S. In light of this and present U.S. yields, Franklin Templeton recommends remaining short duration and exercising selectivity within EM and high yield markets.
The Evolving Long Credit Universe (MetLife Investment Management, 2021)
MetLife Investment Management highlights the continual evolution of the long credit universe and the impact it has had on the Barclays U.S. Long Credit Index over time.
Should Investors Sell the Rallies or Buy the Dips? (Invesco, 2021)
For compliance reasons, this paper is only accessible in certain geographies
This 37-page Invesco chartbook looks into the recovery trade. Will stocks continue to outperform? Will there be another significant drawdown soon? Or should investors buy the dips and continue to ride out any volatility?
After Covid-19: Opportunities in the new normal (Manulife IM, Mar 2021)
For compliance reasons, this paper is only accessible in certain geographies
In the wake of the pandemic, some of the shifts that are in the process of transforming the global economy are technological, while others relate to deglobalisation and a continuation of stimulus measures. All of these shifts have investment implications.
THAT WHICH IS GREEN
Is ‘Purpose’ the New Green? (Aviva Investors, 2021)
For compliance reasons, this paper is only accessible in certain geographies
Before the pandemic, many corporations were calling for a move towards a corporate governance model that put stakeholders (rather than shareholders) first. Aviva Investors examines this distinction and its implications for ‘corporate purpose’ in the years ahead.
Green Bond Bulletin: The case for green sovereigns (NN IP, 2021)
The green bond market is growing. In this paper, NN IP looks at how governments and supranational entities are using green bonds to finance sustainable projects across the globe.
