Sharing our convictions

With all of the recent data pointing to higher inflation expectations and the Fed expected to maintain a transitory interpretation, we will be focusing our attention on comments from the various regional Fed presidents on conditions that could prompt a tapering move at some point in the future.

European equities have lagged the US for more than a decade. But there are reasons to believe that Europe can outperform again: The benchmark is now more exposed to higher growth companies, valuations are attractive, macro reforms have mitigated risks and Europe is leading the way in ESG.

Rising food prices have triggered revolutions – from France in 1789 to the Arab Spring in 2010. Now, they have taken a massive jump. Smart farming could help to keep the lid on prices, reduce hunger in poor regions, increase biodiversity – and fertilize financial portfolios.

We believe UK government bonds are ultimately most vulnerable to a rise in inflation, and the 10-year Gilt currently trading at 0.73% does not come close to compensating for this.

It is not only since the 2 trillion infrastructure plan proposed by President Biden that infrastructure investments have emerged onto investors’ agendas. Particularly listed infrastructure investments may offer compelling and complementary benefits to an overall portfolio. Would you like to learn what these are and how listed and unlisted infrastructure investments differ from each other?

This study, surveying 300 professional investors in Europe, explains who is shaping the thematic investing landscape and what are the possible future challenges and opportunities.

Frustratingly for fixed income investors looking to buy bonds, the data seem to fully justify the high valuations we see in so many parts of our market at the moment; it really would not make sense to be able to buy bonds cheaply when conditions are so good.

High-growth, high-momentum stocks were among the best performers of 2020, then value stocks rallied into the first quarter of this year. We are cautious of valuations, as some stocks have already priced in a recovery. Investing in quality companies with predictable earnings power at reasonable valuations can help investors prepare for a rainy day.

In the latest Global Market Outlook, Vescore’s specialist team explains what the models are signaling while market participants are concerned about inflation and monetary policy.

While we don’t expect any material spread widening in the near term, we remain extremely wary of higher duration bonds given our view that the potential persistent inflation suggested by recent data isn’t priced into US Treasury yields, which currently sit around 1.58% at the 10-year point.

The economy, reborn to be wild, is currently heading down the highway in a haze thanks to stimulating stuff from central banks and governments. It may enjoy the high some more, but peak growth is near and return assumptions will have to come down.

The economy is a Covid survivor but what about the people cut off from food supplies, healthcare, or education? Focusing on companies driving environmental and social change may be something we can do to help improve their lives.