Market Outlook

The Impact of Falling Energy Price

December 2014
The recent decline in energy prices has been significant as crude oil prices have fallen more than 40% from their 2014 peak levels. Investors should be aware that diversified portfolios have implicit exposure to the energy sector in nearly every asset class and not exclusively asset classes which are directly invested in crude oil futures or energy businesses. This Rocaton Insights reviews the implications of the fall in energy prices, examines investors’ potential exposure to the energy sector and revisits our thoughts on the commodities futures market.

 

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Bond Market Liquidity

September 2014
Fixed income market liquidity, defined as the ability to transact in the market without affecting the asset’s price, has always been varied. This disparity in liquidity presents both opportunities and challenges for investors. Potential challenges stemming from bond liquidity have risen as evaporating market liquidity could cause prices to fall rapidly and sharply in the event of a market correction. This Rocaton Insights explores current liquidity conditions across fixed income markets and the potential implications for investors’ portfolios.

 

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Investing in a Low Return Environment

August 2014
Over the last five years, capital markets across the globe have rewarded investors handsomely. Unprecedented monetary stimulus from central banks around the world has lowered interest rates and boosted equity markets. This has led to a scarcity of attractively priced assets and lowered future return expectations for most asset classes. As a result, investors may be asking themselves how to position their portfolios. The balance of this Insights will describe potential routes that investors might consider including moving to a more defensive positioning, hedging against downside outcomes (i.e. options or tail risk management strategies), increasing portfolio risk to compensate for low expected returns or maintaining existing allocations.

 

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End of the Commodities “Super Cycle”?

August 2013
Investors allocating to commodities have often cited diversification benefits and inflation hedging properties as two of the primary attributes which make the asset class compelling. While Rocaton still believes a portfolio of commodities can provide these benefits, we are concerned about the prospects for returns in the near- and medium-term. In the attached Rocaton Insights, we review current supply/demand dynamics and discuss our outlook for the asset class.

 

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Reasons to be Optimistic in 2013

March 2013
Attached please find a Rocaton thought piece on market sentiment entitled Reasons to be Optimistic in 2013. In recent days, domestic equity markets have reached new highs, yet investor sentiment remains clouded by the significant economic and political challenges ahead. We at Rocaton are not economists and are not prone to excessive optimism, however, we would like to challenge certain prevailing opinions and raise awareness of the concept of improving fundamentals. We have assembled a list of positive developments followed by a summary of the main challenges facing global economies and markets.

 

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