All Ahead of the Curve articles
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InterviewsMeasuring the impact of non financial factors on GDP growth
In their paper entitled Modeling the Links Between Economic Growth, Socio-economic Dynamics and Environmental Dimensions: a Panel VAR Approach, the authors attempt to quantify direct and indirect causalities between economic growth and extra-financial dimensions, including demographics, biodiversity, climate change, political stability, inequalities and economic growth.
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InterviewsAI’s future in investment management is evolutionary
The explosion of ChatGPT-style large language models (LLMs) has ignited a heated debate over the future of artificial intelligence (AI) in investment management and its role in institutional investor portfolios. However, amid the noise, a groundbreaking application of AI has quietly arisen, which has the potential to revolutionise the industry.
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InterviewsRefining how factors impact investment returns
Investment management has undergone a significant transformation with the introduction of environmental, social and governance (ESG) investing. It emphasises a more holistic approach that goes beyond financial returns to assess long-term sustainability.
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FeaturesNLP can help identify linkages between equity market peers
Natural language processing in AI provides a way to gain insights from unstructured data at scale, allowing access to information across a broad set of investment opportunities
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InterviewsThe great desyncronisation age in global financial markets
Investors are witnesses to the end of an era of synchronised global growth, when China could be counted on for outsized expansion that provided a broad cross-border lift for economies, industries and asset classes.
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InterviewsPricing the decline of democracy for investors
History does not progress in a linear way. Science, democracy, technology, arts, the economy and any other type of evolutive process advance and recede in chaotic movements, even though they ineluctably move towards progress. Those recessions and pull-backs often go unnoticed at first, at least to the casual observer. And yet, they end up profoundly sanctioned by all stakeholders including the economy, financial markets and investors.
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InterviewsInversion anxiety: what’s up with yield curves in 2023
For over half a century, each time the spread between US 10-year and three-month yields turned negative, indicating an inverted yield curve, a recession followed, sooner or later. In 2023, the yield curve has been more than just a little inverted.
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FeaturesThe US dollar’s declining status as a global reserve currency
The recent US debt ceiling negotiations have brought into question the viability of the US dollar’s status as a global reserve currency. Long-term investors have been reviewing their strategic asset allocation away from the currency, seeking to diversify their exposure and to take advantage of long-term investment opportunities.
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FeaturesAhead of the curve: Is growth back or is it a trap?
It is likely you have heard about ‘value traps’. They are low-multiple companies that are priced at an ever expanding discount to the market and structurally underperform as fundamentals weaken due to new competition and, in extreme scenarios, may even face obsolescence.
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FeaturesAhead of the curve: The rise of multi-manager models for alternative investing
Fifteen years after the ‘global financial crisis’, multi-manager strategies for alternative investing have not only shaken off their tarnished reputation but have evolved
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FeaturesAhead of the curve: What happened to equity volatility in 2022 and what next?
Something strange happened last year. Expectations about the future level of volatility in US equities – implied volatility – behaved in a very unusual way. In a falling market, the price of implied volatility normally rises because equity falls are associated with a worsening macroeconomic outlook, implying more market risk. Expectations of future volatility therefore increase.
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FeaturesAhead of the curve: Introducing the concept of a carbon risk-free curve
As global investors and companies progress towards their net-zero emissions targets, the concept of a carbon risk-free curve becomes increasingly relevant within the fixed-income market. In our view, this curve should provide a reference for evaluating the risk levels of bonds in relation to their issuers’ CO₂-equivalent (CO₂e) emissions and can therefore help investors to assess the impact of changes in CO₂e emissions on the yield spread of fixed-income bonds.
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FeaturesAhead of the curve: The missing elements in the digital currencies debate
The recent contraction of the cryptocurrency markets poses questions about the viability of digital currency as an asset class for institutional investors. However, these developments have not undermined the efforts of central banks to pursue their own digital currency initiatives.
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FeaturesAhead of the curve: Time to automate collateral management
The resilience of financial markets has been tested several times in recent years, from the so-called ‘dash for cash’ at the start of the coronavirus pandemic in March 2020 to the spike in UK Gilt yields in September 2022.
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FeaturesAhead of the curve: Is small cap the next mean reversion trade?
By now, most investors have noticed a rebound in value relative to growth in equity markets. After underperforming growth over the past decade, value stocks are experiencing strong mean reversion and outperforming significantly.
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FeaturesAhead of the curve: Recalibrating alternative allocations for a new market
Geopolitics, inflation, and central bank policy have agitated financial markets in 2022, leaving returns and diversification in short supply. A comparison of global equities and bonds provides a sense of just how challenging the results have been.
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FeaturesAhead of the curve: Beefing up guardrails as risks rise in private credit
For US and European private credit firms, storm clouds are gathering.The recent rate hikes by the Federal Reserve, European Central Bank (ECB) and the Bank of England (BoE)have numbed activity in the leveraged loan and high-yield spaces.
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FeaturesAhead of the curve: Clearing up the ‘scaling’ confusion in carbon intensity
Today, a company’s carbon intensity is typically measured in one of two ways – scaling by revenue, or by EVIC (enterprise value including cash). The choice an investor makes can lead to differences in portfolio characteristics.
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FeaturesAhead of the curve: Are defensive strategies delivering?
Introducing ‘defensiveness’ to equity portfolios can take many forms. At the most explicit end of the spectrum, we can consider dialling down market exposure using derivative-based equity overlays – whether these are static protection programmes or more complex dynamically managed strategies which could even include some implicit volatility trading. At the more implicit end, promising reduced ‘downside capture’, we find a wide array of defensive long-only equity strategies.
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FeaturesAhead of the curve: solving the Russian share ban
Index investors inherently choose to follow the market through exchange-traded and index funds, but the recent prohibition on trading Russian stocks and their removal from global benchmarks has created something of a conundrum.
