1. Equity markets experienced some turbulence at the start of the February, breaking a period of calm for investors.
2. We have been concerned with the excessively low levels of risk priced by the market and these were at odds with the potential headwinds we had identified.
3. Given our more defensive and risk managed approach to equity investment management, we were able to provide our investors with a level of outperformance.
Perspectives paper written by Maria Musiela, Investment specialist, Equities, and Alexandre Marquis, Head of Investment Specialists, Equities
Following last week’s stock market plunge, we felt it was an opportune moment to give some insight into how our Multi Asset Navigator strategy was positioned ahead of time and where we see the opportunities in the near future.
Special report written by Unigestion’s Cross Asset Solutions team
-We expect the overlooked inflation story to make a comeback this year.
-In our view central bank accommodation will shrink globally and monetary normalisation will accelerate more quickly than expected
Our macro and investments themes outlook for 2018 anticipates a more challenging environment for investors. While global growth is expected to remain solid, inflation should accelerate and central banks could take a more hawkish stance. Despite this more challenging environment, we outline three tactical investment strategies that should benefit from these economic and market conditions.
The popularity of alternative risk premia (ARP) is growing and strategies that focus on ARP are increasingly being incorporated into institutional portfolios. The attraction of this approach is that ARP can mimic strategies that have historically only been available through hedge fund vehicles, but with more favourable liquidity and cost characteristics. However, as investors familiarise themselves with this newer universe of investment strategies, the disparity of results that is being delivered by these solutions in practice is raising some questions. This paper aims to highlight some of these variations, provide an explanation for them and to also provide some suggestions for investors considering this exciting new investment approach.
In our view, there are three elements an investor should consider:
1-It is important to scrutinise a manager’s definition of individual risk premia; despite being broadly categorised under the same name, we have found that risk premia can have significantly different performances across investment solutions.
2-The methodology that managers use to allocate between risk premia should be closely scrutinised; our observations have shown that even portfolios managed using “equal risk contributions” can be defined in a number of ways, which can have implications on the end result.
3-The benefits of diversifying across several alternative risk premia managers should be considered, as the resulting low correlation could help investors obtain improved risk-adjusted performance without significantly increasing their portfolio’s beta to traditional equity markets.