Insights

Against a backdrop of solid growth and declining inflation, for much of the year so far investors have anticipated a series of US interest rate cuts, thus conforming to the perfect soft-landing narrative. It now looks as though that narrative is being challenged.

In one of the toughest economic climates in decades, UK workers might be forgiven for being wary of having to pay more for anything.

How cuts to bank lending could grow the asset class

For how long can the developed economy withstand the pain of higher interest rates? And how will that impact the fixed income arena?

An overview of our findings in emerging markets and an introduction to our campaign.

In their latest investment outlook, our Asset Allocation team weigh up the macro and market impact of stress in the banking sector – and how it’s affecting their positioning.

Our research suggests the window to achieve a 1.5°C outcome, consistent with ‘net zero’ emissions by 2050, is closing fast.

As delegates gather at COP27, they confront the same long-term challenge posed by climate change as they did last year. But the context has changed dramatically: in light of the war in Ukraine, governments need to balance net-zero goals with a new imperative for energy security.

Rising interest rates have lowered future liabilities while decreasing LDI portfolio collateral levels. Here’s how schemes can seek to balance this scenario.

It was a turbulent first half of the year for markets. Has it merely been a challenging period? Or are we seeing a full-scale change of market regime?

Even though 2022 has begun with an abrupt change in the macro narrative, stoked by the Fed, we hold the line on our bullish outlook for risk assets.

In our 2022 Solutions Outlook, members of the team share their insights on what we believe to be some of the key themes for the year ahead. From CDI and credit markets to inflation, green gilts and equity protection strategies, we discuss some of the most important topics for DB pension schemes this year.

Q4 2021 - An introduction to Active Strategies

With record amounts of stimulus still gushing through global markets, and the economic cycle at a relatively early stage, we remain positive on risk assets.

Greater political certainty in the US, combined with positive news on both the efficacy and deployment of COVID-19 vaccines, have given investors the green light to add risk.

Despite the ongoing challenges, we see next year as a time for healing – for the economy, environment and society.

As we look ahead to the next three months, and consider how to invest on behalf of our clients, we are confronted by seemingly conflicting signals from depressed bond yields and exuberant equities.

Nervy investors are eyeing top-heavy market-cap indices with suspicion. But how can they use factors to navigate the trade-off between diversification and concentration risk?

We look at whether TIPS (Treasury Inflation Protected Securities) deserve a greater role within UK defined benefit (DB) schemes’ portfolios.

Managing transfers out of DB pension schemes.

Cashflow matching strategies are customised investment solutions, designed to enable clients such as pension schemes or insurance companies to meet their liabilities. We believe that emerging market fixed income has an important role to play in designing cashflow matching strategies.

Unfortunately for markets, our bearish outlook for 2018 came to pass. For 2019, the key question is how tightening financial conditions will impact heavily indebted borrowers – and whether this raises the risk of recession.

There are so many elements to consider when building factor-based solutions it can be overwhelming. We’ve highlighted two case studies of investors tackling these challenges.

The falls over the past two years in high yield and emerging market debt (‘alternative credit’) credit spreads,1 along with indications of late-cycle behaviour in the US, has led some investors to be nervous about allocating to these areas. But should pension schemes reconsider?

We turn cautious on global equities on a tactical and medium-term view, as US stocks flirt with record highs even though risks to the world economy are mounting.

Investors have been buffeted by a large number of negative headlines in 2018. We remain of the view that tightening global liquidity conditions are likely to exacerbate market volatility.

Investors need to factor in how immigration concerns in the European Union could fuel the rise of populist parties, potentially increasing the political risk premium.

Traditional models suggest there is a very high chance equities outperform over the long term. But are they overconfident, and should long-term investors adjust their asset allocation accordingly?

Is artificial intelligence overhyped, or are we at the vanguard of a new wave of corporate productivity improvements ushered in by next-generation technology?

While the financial reforms pose risks to trading, we can take heart from the benefits of greater transparency, says Ed Wicks, Head of Trading at LGIM.

The disruptive change of the ‘shale revolution’ has forced existing producers to adapt while reducing OPEC’s pricing power. We expect further far-reaching changes to take effect in the coming years

A renewable revolution is taking place in the way we produce and consume energy and it presents an enormous opportunity for investors.

Predictions about the demise of the TV industry have persisted for over a decade, even as UK TV advertising and subscription revenues have continued to grow. However, we believe the industry has reached a tipping point, driven by rapid developments in technology and changing demographics.

Increasing life expectancy is one of the most profound success stories of the post-war era. The pace and scale of this human success story has been remarkable, but it is creating its own challenges for corporates.

The world is changing and how it looks in five years’ time will be very different to today. A long-term perspective is the key to success.

Technology change presents risks as well as opportunities. Identifying and valuing these risks is crucial to preserving investor value in both the short and the long term.

Some countries are in pole position, while others are in danger of crashing out. The global labour force (the number of 15-70 year olds willing to work) is slowing down.

Global credit markets have shown remarkable resilience over the past year.

In a largely anticipated result, Emmanuel Macron has won the French presidential election.

Monetary support is being tapered despite significant risks. Pressure is building steadily and we think that recent resilience is going to be tested.