M&G Investments

In what has been a very volatile start to the decade for global society, Randeep Somel, Fund Manager at M&G Investments, discusses how it is vital that we do not lose sight of the long-term challenge of climate change.

Here’s an update of my favourite long term measure of bond market valuations.  I’ve been updating this chart on the blog over the years, and if you’d bought and sold US Treasury bonds when they diverged significantly from the range implied by the Fed’s long term rate expectations, you would have done OK

Markets ended 2020 in a buoyant mood, with emerging market spreads tightening in the final quarter as the US election result and positive vaccine news provided a boost to investor sentiment. While nobody has been blind to the global recession, focus has shifted to expectations of an economic recovery.

If you want some or more of your savings to be invested in a sustainable way, you are part of an emerging trend. Growing numbers are choosing investment strategies that aim to help protect the environment and benefit society, while targeting the long-term financial returns to which investors aspire.

This year has seen the sharpest and largest economic downturn the modern global economy has ever seen. However, as I have commented several times this year, this recession is a rather strange one: for once, this time really is different (see chart below). This recession has not been caused by any of the usual suspects: namely tight financial conditions, a real or market bubble bursting, a s…

Urgent action is needed this decade to meet global commitments on climate change. There are compelling long-term opportunities for companies that can actively accelerate the shift to a low carbon economy.

Infrastructure holds an important place in the fabric of modern society, serving as the backbone of the world economy through good times and bad. As such, we believe that the stable and growing cashflows generated by the asset class across the vagaries of the economic cycle have an equally important part to play in investors’ portfolios over the long term.

The global economy is showing early signs of a recovery and although the outlook remains uncertain, many investors are starting to think about a world beyond COVID-19 – where the outcome of significant fiscal stimulus is the return of inflation. How would listed infrastructure fare against a backdrop of higher bond yields and rising interest-rate expectations?

The 2020 US election could lead to major changes on tax, spending, climate change and healthcare – but maybe not trade. Labor Day on the first Monday in September represents the unofficial starting line for final US presidential election campaigning, following the national conventions of both major parties. While the conventions and election discourse have focused on the character of the candidates, rather than policy, we can begin to decipher what a second Republican term under Donald Trump or the Democratic presidency of Joe Biden would look like.

Today’s headlines have been dominated by the news that Japanese prime minister Shinzo Abe has announced his resignation due to health reasons. While markets seem somewhat spooked by this, there’s reason to see this as a good entry point into Japanese assets rather than a reason to run away.  

As we emerge from the immediacy of the coronavirus pandemic, the scale of the damage becomes ever more apparent. The human toll is stark, with the virus reported to have taken close to three quarters…

While investors’ knowledge about Responsible Investing has generally improved over the past few years, the increasing diversity of thought in the market has created new layers of confusion. Overall, investors are better equipped to grasp the distinctions between ESG and impact investing, but remain rather perplexed about the differences between sustainable and impact investing, often mixing one with the other. From a distance, sustainable and impact investing appear quite similar. A closer look, however, reveals meaningful differences.

The measures taken to slow the coronavirus pandemic have effectively shut down swathes of the global economy, prompting the sharpest downturn in generations.

We are currently in the throes of the sharpest and largest economic downturn the modern global economy has ever seen. However, as I wrote in March this is very different from previous recessions.

When we talk about market ‘episodes,’ we often mean periods where investors appear to give up on their own long term beliefs due to what prices are doing right now.

It is common to see correlated declines across range of apparently unrelated asset classes during these episodes, which was exactly what we saw in March. Such periods of heightened correlation can be highly revealing of the changing beliefs embedded in markets and how behavioural forces might be playing a role.

Airlines face an uphill battle. The demand shock on the back of the COVID-19 pandemic has seen the Services sector hit particularly hard in this downturn, not least the Commercial Aerospace industry. It’s difficult to read the latest headlines without encountering a story on potential airline bankruptcies, mass job losses and urgent bids for government assistance. Some governments including the US and France have been more forthcoming here, but targeted rescue funds have come with strict conditions attached.

While passive investments have grown in size and prominence in recent years, we believe there are several crucial advantages for investors in choosing active management when investing in fixed income during the current climate.

James Carville was candidate Bill Clinton’s chief strategist for the 1992 election. When asked to emphasise the single most important issue to voters, Carville responded: “It’s the economy, stupid!”