Here are the top 3 insights for May 9th, prepared by Alister, our CTO.
- S&P Global: Asia-Pacific Banking: Despite Different Strokes, Government Lifeline Is Still Likely
- Wellington Management: Multi-Asset Outlook — What’s really changed?
- Neuberger Berman: FX Markets — What’s Top-Down and What’s Bottom-Up?
- Many Asia-Pacific countries retain the flexibility of government bailouts as a support mechanism.
- We see extraordinary government support as the most likely form of support in a crisis for the majority of Asia-Pacific banking systems.
- In contrast, extraordinary support for systematically important banks is uncertain in most Western Europe and North American jurisdictions where banks are more likely to rely on ALAC.
- Resolution reforms, including for the possibility of bail-in and not bailout, have recently made significant progress in Japan, Singapore, Hong Kong, and Australia.
Genuine Scores for the top 3 Asia Pacific focused funds
- LO Funds — Asia Value Bond, 77
- Fidelity Funds — Asian Hi Yield, 71
- First State Asian Quality Bond, 65
- Favor credit over equities, and within credit, investment-grade and high-yield bonds over bank loans.
- Within equities, lean into defensive factors, such as quality and safety, and consider emerging markets, which could outperform if China reaccelerates.
- Our differentiated views, credit over equities, and EM equities as a hedge
- Risks: Fed policy changes, expanded trade war, upside economic surprise
Genuine Scores for top 3 Mixed Asset funds
- Columbia Thermostat Fund, 94
- T Rowe Price Capital Appreciation Fund, 94
- John Hancock Capital Appreciation Value Fund, 94
- In most strategic and tactical asset allocation processes, foreign-exchange exposures — especially emerging markets foreign exchange exposures — are implicit and go unconsidered by investors.
- At Neuberger Berman foreign exchange has always been considered an explicit alpha source that plays an important role in an effective asset allocation process.
- Nonetheless, because we assess each currency using bottom-up country-by-country indicators, we have long recognized that our allocation process may be missing the top-down factors behind the performance of individual currencies.
- Moreover, the higher correlations among emerging markets currencies since the financial crisis of 2008–09 indicate the growing importance of these top-down factors.
- In this paper we propose an intuitive top-down, five-factor model of foreign exchange returns.
- We show that this model can be used to separate systematic from genuinely idiosyncratic return drivers in foreign exchange markets, and also to build a simple, systematic long-short strategy that would have substantially outperformed the average EM or DM currency market return over the past 10–15 years.
Genuine Scores for the top 3 Globally focused Bond funds
- PIMCO Short Asset Investment Fund, 100
- Pioneer Multi-Asset Ultrashort Income Fund, 99
- DFA Two-Year Global Fixed Income Portfolio, 99
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All the best, Alister and the Genuine Impact Team
p.s. all Genuine Scores are accurate as of the 5th of April