Asset class insights
Stranded assets what lies beneath
As evidence of the impacts of climate change mount across the globe, including the warmest year on record to date, asset owners are increasingly asking: Should we continue to invest in fossil fuels? Many asset owners are considering the argument that fossil fuel reserves cannot be safely burned without triggering run-away global warming – the Stranded Assets hypothesis.
Riding a new wave – Emerging markets: The new normal
For the last several years, global markets have experienced a “New Normal” of low economic growth and persistently low inflation. The tepid economic recovery from the great financial crisis of 2008-2009 is one factor driving the New Normal. Low long-term bond yields and a flat yield curve bears evidence that the markets believe in the New Normal as the base case scenario.
Alternative beta: Risk premia investing that is more targeted in nature than broad market beta
Smart beta, factor beta, strategic beta ... it goes by many names; we prefer the term alternative beta. What it generally refers to is risk premia investing that is more targeted in nature than broad market beta. Its origins lie in early quantitative investment approaches that seek to add value using factor based models for identifying what are now familiar return drivers, e.g. value, momentum, size and quality to name a few. Although initial applications have primarily been focused on equity markets, the alternative beta concept can also be applied to other asset classes such as fixed income and commodities.