Market Insights
Strategy Update I Reviewing Financial Conditions I September 2023
Overview The decline in inflation at record low unemployment rates is welcome news, but there is uncertainty about how much further it will fall. This will keep rates higher for longer and ensure full pass-through of the work done thus far. A US recession is only...
Thematic ETFs: Correct Narrative, wrong prices: A history of attention-grabbing wealth destruction?
Overview Thematic investing has generated significant interest across the investment community in recent years. In tandem, thematic index investing is increasingly making headlines as investors seek passive options that offer the same exposure as an active thematic...
Coolabah Active Composite Bond Fund (Hedge Fund) (CXA: FIXD) August
Key Points: The Coolabah Active Composite Bond Fund (Hedge Fund) (the Fund or FIXD) is an active, fixed-income strategy. It is listed on the CBOE. Its focus is on mispricing in the government and corporate bond markets, with the aim of delivering superior...
The Inflation War Is Not Over – Dynamic Asset Allocation Update
Key Points: A global recession remains our base case, although we now concede it is more likely H1 next year. The US has been more resilient than we had anticipated and is propping up the global economy making the global economy vulnerable to a US downturn. The...
Understanding ETF Trading Dynamics: The Role of Market Makers and Bid-Ask Spreads
Overview Unlike equities, ETF trading is heavily influenced by institutional brokers/investors referred to as authorised participants (APs) or market makers. Though these two terms are sometimes used interchangeably, they have distinct functions. APs manage the...
Cyclical Strategy Update I Short Term Resilience Insufficient to Change Base Case I June 2023
Short Term Resilience Insufficient to Change Base Case Key Points Better-than-expected economic data over the past few months does not mean a recession is not around the corner. The market has latched onto more resilient economic data, particularly in the US...
Remaining Defensive as Evidence Supports Rising Probability of a Global Recession
Foresight Cyclical Asset Allocation View Key Points ➢ A global recession remains our base case. Gradually tightening financial conditionsare grinding the global economy into a recession. The speed of the slowdown could wellbe frustrating for those...
Perspectives on Silicon Valley Bank (SVB) | Market Insights | March 2023
Key Points The recent collapse of 3 regional US banks is a timely reminder of the impact of tighter monetary policy on liquidity. These banks carried idiosyncratic risks and leveraged into either speculative venture capital or high-risk lending. At this stage, there...
Australian Private Debt Market Review – Opportunities and Risks for Investors
Summary Foresight Analytics’ Australian Private Debt whitepaper provides investors a practical framework for evaluating the strategies available to Australian investors and offers insights on position sizing and allocation layering. Titled ‘Australian Private Debt...
ASX 200 stocks at risk during recession – Having a Look Under the Bonnet
Key Points: We recently updated our TAA/DAA outlook and are now positioned for recession. We recommended a weight of 3/10 in Growth assets and 4/10 in defensive assets with our highest weight 7/10 in cash (TAA Updated Q3 2022 – 15 September). Equities are unlikely...
Foresight Strategy Update – It’s time
Key Points: Recessionary winds are blowing and it’s time to pull down the sails. In equities, the tactical rally back after the correction in the first half of the year appears to have run its course. Tuesday’s US CPI was a timely reminder that the inflation threat...
Australian Long Short Managers Deliver Strong Risk-adjusted Results – Foresight Long Short Report, June 2022
Key Points: Our analysis of the Australian long-short managers shows encouraging results over the past two years. Historically, A-L/S managers have had mixed performance track records. As always, manager performance dispersion has increased, the median manager has...
ASX Reporting Season Update – Good enough for the optimists
Key Points: Investors need to keep in mind that reporting season in Australia is occurring at a significant turning point in the global economic cycle. Cost pressures have been well understood and there were not too many misses solely on underestimated costs....
Value and Momentum Factors win over the past 1 & 3 years – Foresight Factor Report June 2022
Risk-off Accelerates in June as Investors Re-price Recessionary Risks
At the point of no return
Key Points: Our recession lead indicators are flashing red and recession is inevitable. However, it’s still too early to increase the underweight in risk assets. The 2-year bond yield hasn’t begun to price in an easing cycle yet, and this is normally the final nail...
Pulling apart inflation in pursuit of a soft landing
Key Points: Remain slightly underweight growth assets. Markets fully understand that rising interest rates and inflation create a backdrop for recession. Indeed, in our recent TAA/DAA update we showed how our suite of indicators suggests recession is likely, but it...
DM/EM Equity Market Review – April 2022
Key Points Emerging Market Equity Disappointment Persists: EM equities (in AUD terms) have delivered mediocre returns in both absolute and relative terms. Many active managers with high allocation/ high beta to EM equites have faced major headwinds in their...
Factor Performance Analysis: The Return of Quality, Growth and Momentum Trio
Key Points Market Background: Developed markets rallied as the initial volatility sparked by Russia’s invasion of Ukraine subsided in most markets throughout March. US and Australian equities made significant gains with the S&P 500 and All Ordinaries up 3.57% and...
Dynamic Asset Allocation Update
Key Points: Raise the bar on cash and alternatives. Move slightly underweight Growth assets and maintain the large underweight in Defensive assets. The correction in equities, thus far, is consistent with those seen just prior to recessions. A tactical rally is...
Latest Asset Allocation Update – Yield curve inversion: Don’t panic, but begin to prepare
Key Points: Stay overweight risk assets, despite US yield curve inversion. It’s not only the US yield curve that is signaling a US recession. Key business surveys are also beating the same drum. However, these signals lead the large equity market drawdown associated...
ASX Reporting Season Update: Plenty of Bright Spots, despite cost pressures
Key Points: The ASX200’s heavy weight stocks such as BHP, RIO, CBA, and CSL all delivered positive earnings results and this provides comfort in our overweight position in the Australian market. Reporting season was generally very solid, with analysts providing a...
Cross Asset Review – January 2022
Key Insights In our latest Cross-asset review, we note the spikes in local and US VIX (share price volatility indices) as well as the Gold price, reflecting rising risk aversion. The rise in inflationary expectations saw increases in real asset prices in January 2022...
Its on: the fight against inflation
Key Points: Stay overweight growth assets. It’s too early to position for a recessionary global equity market drawdown. Equity market Investors need to accept that returns will be more modest they have been over the past couple of years and that volatility will...
Australian and Global Market Outlook – Your Strategy for 2022
Key Points The outlook for 2022 is more uncertain than 2021 was at this time last year. Last year the vaccination rollout was accelerating in developed markets and opening up was being planned. EM vaccination is still limping along and the emergence of a new variant...
Slidedeck: Your Asset Allocation Strategy for 2022
Key Points The pandemic is not over Global inflation The business cycle Geopolitics Key asset class valuations TA A preferences and the AUD Please fill in your details to get report:
Cross Asset Review – October 2021
Key Insights In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In October, Emerging companies, AUD Currency Index and S&P 500 delivered positive returns while bonds and bond...
Australian Equity Factor Performance Report – October 2021
Key Points: In Foresight’s monthly Australian Equity Performance review, we look at the performance of key market factors: the various structural drivers of Australian share market. Foresight factor premiums show the returns attached to generally accepted, systematic...
Unpacking Inflation
Key Points: Stay overweight growth assets. The global inflation scare isn’t yet a trigger for a global central bank tightening cycle that will bring to end to the equity market rally and risk asset outperformance. Inflationary pressures are more concerning in the US...
Emerging Markets Equity Environment Analysis – September 2021
Key Points- September 2021 Market Review Momentum and Quality outperformed all other factors. Value style recovery continues across Global markets. Europe, Middle East and Africa outperform all other regional blocs; Top 2 European countries deliver returns in excess...
Global Equity Environment Analysis – September 2021
Key Points- September 2021 Market Review Frontier markets outperforms Developed markets and EM. At a country level, Developed markets like Austria and Netherlands, offered highest returns.. Value and Small Cap outperform all other factors over 1 year period. Value...
Doubling down on Aussie equities
Key Points: Stay overweight Australia. Australia is beginning to outperform the US and history shows this can last for at least 12 months. Furthermore, Australia tends to outperform when the US yield curve is steepening. This outperformance was absent during the...
Cross-Asset Review – An evident shift in risk-seeking investor behaviour maintained as vaccination goal rates achieved nation-wide.
Key Insights In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In September, Emerging companies and Commodities delivered high positive returns as nation’s vaccination rate...
Cutting though equity style around Fed tapering?
Key Points: In our previous note, we argued Fed tapering should not be feared by risk assets even though volatility is likely to increase. We have not changed our view and continue to run a modest overweight to risk assets, with a preference for Aussie equities over...
Global Equity Environment Analysis
Key Points- August 2021 Market Review Value and Small Cap outperform all other factors over 1 year period. Value style recovery slows down across Global markets. Developed market outperforms Frontier markets and EM. Top 2 Developed markets countries- Austria and...
Could it be Déjà vu on Fed Tapering?
Key Points: The prospect of Fed tapering should not be feared by risk assets, although asset allocators should be prepared for increased volatility. We continue to run a modest overweight to risk assets, with a preference for Aussie equities over the US and Europe....
Cross-Asset Review – An evident shift to risk-seeking investor behaviour realised as vaccine roll-out paces up.
Key Insights In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In August, risky assets like EM equities and REITs deliver high positive returns as vaccine roll-out accelerates...
Active Insights – Global Equity Value Managers
Key Takeaways Excess returns for Value managers was much higher at 6.10% over the past year compared to -1.56% pa over 5 years. During COVID 19 stressed period, the median Value manager was not able to deliver positive skill-based alpha. Key biases of Value managers...
FX Analysis & Outlook
Summary The recovery over the past 12 months has been led by a range of currencies – AUD gained significant ground against JPY (+6.57% yoy), HKD (+3.12%), USD (+2.83%), INR (+2.04%), EUR (+2.04%) and CHF (+2.00%). Against this backdrop, unhedged investors faced...
Cross-Asset Review – Investors move towards Safer Investments as the concerns over COVID 19 Delta variant grows
Key Insights In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In July, Safe haven assets like Gold and Bonds deliver high positive returns as concerns over COVID 19 Delta...
Asset Allocation – Dynamic and Strategic August 2021
Understanding the Drivers of Consensus Expectations • Global consensus is positioned for mid-cycle, and we agree with this assessment. The rapid increase in COVID-19 case numbers even in countries with relatively high vaccination rates is a key risk, but central banks...
Asset Allocation Insight – Business Cycle Analysis & its Implications for Asset Pricing.
Key insights • Covid-19 recession has been remarkably like past US recessions according to the yield curve and business surveys. • Yield curve is now steep in contrast to period just prior to recession, suggesting the business cycle is relatively immature and growth...
Asset Allocation Insight – Global Macro Cycle and Themes
Key insights • Countries with low vaccination rates and resurging case numbers (Australia, Korea, Indonesia, Japan) are facing economic pressure as health authorities respond with lockdowns and travel restrictions • Countries with low vaccination rates and low case...
Asset Allocation Insight – Current Asset Class Tilts
Key insights • We are at mid-cycle and the easy gains have been made, but we have a preference for risk assets. Valuations in both growth and defensive asset classes are stretched and there is little benefit in holding excess cash. It is now a game of relativities. •...
Global Equity Market Environment Review – Pandemic induced shock causes massive dispersion in global equity valuation and performance.
Key insights Global equities continued to recover as investor risk appetite improved on the back of cyclical economic and business recovery over the past 12 months. The 12 months return for all countries index clipped at 27.7% with EM outperforming DM and Frontier...
Cross-Asset Review – Risk seeking behaviour continues to be rewarded as Commodities, Small-, Mid- and Micro-Caps top the charts
Key Insights In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In June, risk on theme continued with real assets rebounding strongly. The top performing assets were Commodities...
Emerging Market Equity Environment Analysis May 2021
Key Insights In this research article we assess the key drivers of Global emerging market equities. We note that significant fundamental dispersion (valuation) created by the 2020 pandemic has led to significant 12 month return dispersions across regions, countries,...
Global Equity Market Environment Analysis- Investors Rotate Towards Covid-19 Sensitive Sectors and Themes as Volatility Subsides
Key Insights In this research article we assess the key drivers of performance on global equity markets. We note that significant fundamental dispersion (valuation) created by the 2020 pandemic has led to significant 12 month return dispersions across regions,...
Inflation Hedges and Real Assets Outperform as Investors Re-price Inflation risks
In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In May, inflation hedges and real assets outperform as investors re-price inflation risks. The top performing assets in May...
Australian Equity Factor Performance Report – April 2021
In Foresight’s monthly Australian Equity Performance review, we look at the performance of key market factors: the various structural drivers of Australian share market. Foresight factor premiums show the returns attached to...