Featured Investment Papers: Mar 2022
Featured Content: Volatility, wealth and real estate trends
Our latest selection of featured thought leadership from top asset managers includes several papers that focus on market volatility, something which has come to the fore during March following the hawkish tone from the U.S. Fed and the conflict between Russia and Ukraine. Stocks, bonds and commodities have all fluctuated significantly in value, a theme underlying several papers, with Northern Trust AM re-weighting their global policy model more defensively, LGIM highlighting LDI hedging triggers for a rising rate environment, and Allspring Global Investments suggesting an option-based overlay strategy for equity portfolios. An interesting academic paper that observes specific market behaviour across a range of global equity markets which seems to be both actionable and also 'hiding in plain sight', is surely worth a peek.
Investment Perspective: Less growth, more inflation (Northern Trust, Mar 2022)
In the light of the Russian invasion of Ukraine and slower growth and higher inflation expectations, Northern Trust AM updates its Investment Perspectives document, and makes some notable changes to its global policy model.
Unlocking Real Estate Value in the 2020s (M&G Investments, Mar 2022)
For compliance reasons, this paper is only accessible in certain geographies
M&G investments explores some of the emerging opportunities in real estate, noting that some previously 'unloved' areas of the sector are becoming more interesting to institutional investors. They suggest that the 2020’s may need a more nuanced approach to real estate investing.
Gold ETFs inflows continue in February (World Gold Council, Mar 2022)
For compliance reasons, this paper is only accessible in certain geographies
The World Gold Council’s paper examines investment flows into gold ETFs in February. Investor demand rose as inflation numbers continued to exceed expectations, while the Russian invasion of Ukraine saw geopolitical risk-based portfolio hedging considerations come to the fore.
Dealing with Volatility: Key concepts for investors (Lord Abbett, Mar 2022)
For compliance reasons, this paper is only accessible in the UK & Europe
In this paper from Lord Abbett, they contend that drawdowns in markets are entirely normal, geopolitical risk is ever present, but eventually markets usually recover, and making wholesale changes in the face of increased market volatility may not always be the best strategy.
Options-Based Downside Protection (Allspring GI, 2022)
Allspring Global Investments considers how an equity allocation with options overlay may prove a more acceptable alternative to selling stocks and buying bonds, while largely maintaining return expectations.
Market-Based Hedging Triggers in a Rising-Rate Environment (LGIM, Feb 2022)
For compliance reasons, this paper is NOT accessible in the United States and Canada
LGIM notes increasing trustee interest in the concept of market-based LDI hedging triggers. They outline a framework for calculating explicit hedge ratios based on real yields and the amount allocated to growth assets.
The Wealth Report (Knight Frank, 2022)
In the 16th edition of the Wealth Report, Knight Frank offers key insights and observations on wealth trends across the globe.
Webinar: Gamma, vanna, charm – Option impacts on the market (Validea, 2022)
Validea argues that investors should better comprehend how options activity affects the investment flows into or out of stocks or indices that can, at times, be quite profound.
They Still Haven't Told You (2022)
This academic paper investigates a pattern of overnight and intraday returns that have persisted for decades, with seemingly only one plausible explanation for its existence.
