Rising US interest rates could pose a challenge for target-date funds (TDFs) that concentrate on “core” US fixed-income exposure. Diversifying across a broad range of bond markets and strategies can create a cushion in a rising-rate environment.
There’s not much suspense around this week’s Fed meeting: the fed funds target rate is almost certain to rise by 25 basis points. We think it’s more important not to overlook this cycle’s endgame.
What should bond investors do when rates are rising and the credit cycle is ending? Perhaps not what you would expect. But getting this right can be critical for the health of your fixed-income allocation.
China is rapidly becoming a trendsetter in many digitally driven industries. This is turning conventional research methodology on its head. Investors should look to China to discover where technology and retail markets around the world are headed.
Passive equity strategies have seen massive inflows over the last decade, in part owing to active management’s struggles. But a closer look at the story within the story suggests that leaving active out of the equation could be leaving money on the table.
It’s human nature to want to protect your portfolio when the market takes a sharp turn. But too often, bond investors make the wrong choices when interest rates rise and credit cycles end. This can have disastrous consequences for returns.
The US corporate credit cycle is nearing its end, and the cycle in parts of Europe isn’t far behind. This can create treacherous conditions for unprepared investors. The first line of defense, in our view, is knowing what to expect.
There’s a curious anomaly in the US stock market. Shares of highly profitable companies have risen more slowly than their earnings growth has in recent years. This is an important signpost for investors in today’s complex market conditions.
Target-date funds played a big part in helping defined contribution (DC) plan participants stay invested through February’s market turmoil. And history does repeat: in the severe 2008–09 financial crisis, these funds kept many participants positioned to take part in a lengthy bull market.
Following a strong 2017, emerging-market debt (EMD) held its own in January despite a sharp rise in US interest rates. That’s no accident. Economic fundamentals have improved dramatically, leaving EMD well positioned to withstand future turbulence.