Active listening, inventive thinking: Tackling the toughest investment challenges.
For more than three decades, the Investment Solutions Group (ISG) has developed asset class-spanning products and services aimed at realizing our clients’ diverse goals. Today, we serve clients around the world, with more than $234 billion in assets under management and under advisory/consulting.*
We provide a wide range of investment solutions, from implementing short-term, tactical exposures to fully discretionary mandates (also known as “Outsourced CIO”). Here are some of our key multi-asset offerings:
Recent data prints point toward a moderation in growth, which is expected after the torrid pace of growth that we have witnessed so far. However, underlying fundamentals continue to remain firm, and positive economic growth should persist. Besides, improving leading economic indicators give reason to believe earnings will remain strong. All in all, the still favorable indicators reinforce our preference for risk assets.
Although some economic data points have started to miss consensus expectations and the spread of the Delta variant raises concern, the overall economic backdrop remains firm in our view and market-based risk metrics continue to point to a favorable environment for risk assets.
The post-pandemic recovery is not complete, but economies appear much improved and signs continue to point to accelerated growth over the second half of 2021. We maintain the view that the macroeconomic backdrop will provide a positive tailwind. Our quantitative models still favor equities and other growth assets such as commodities and our forecast for core bonds continues to improve as well.
Recent economic data points to a broadening of, and acceleration of, global growth led by developed markets. The biggest threat to strong near-term growth is likely on the supply side, where bottlenecks and labor shortages have kept inventories slim. But this is merely a delay, not a chink in the amor of an improving global economy. Overall, we continue to expect the macroeconomic backdrop to remain supportive.
Our longer-term asset class forecasts are forward-looking estimates of total return and risk premia, generated through a combined assessment of current valuation measures, economic growth, inflation prospects, ESG considerations, yield conditions as well as historical price patterns. We also include shorter-term return forecasts that incorporate output from our multi-factor tactical asset allocation models. Outlined below is the process we use to arrive at our return forecasts for the major asset classes.
Over the last decade, inflation has been subdued around the globe and struggled to come close to central bank targets despite loose monetary policy actions. However, influenced by the economic effects of the global pandemic, inflation appears poised to re-emerge in 2021 and to have an impact in the years to come.
* As of June 30, 2019. Total AUM of $211B excludes execution-only LDI. Derivatives-based exposure management AUM represents the notional value of exposure managed. Assets under advisory/consulting of $23B includes mandates for which the firm provides advisory or consulting services supporting an investment management process that does not include the responsibility to arrange or effect the purchase or sale of securities and/or funds.