Lower-for-Longer Growth Expectations and Return of Volatility
a Challenge to All Investors
State Street Global Advisors (SSGA) the asset management
business of State Street Corporation (NYSE: STT), today released
its six month check-up on the 2016 market outlook and key
investment themes.
In the wake of the Brexit vote in the UK, SSGA’s Global Market
Outlook for the second half of the year urges investors to think
differently about their investment strategies to confront the
challenges ahead, and emphasizes the need for defensive strategies
to help weather volatile markets. Investors may also want to
consider re-engineering core exposures to target better
risk-adjusted returns amid a persistent low-growth environment.
“We expect that spikes in volatility triggered by a range of
geopolitical factors will continue to characterize markets for the
remainder of the year,” said Rick Lacaille, SSGA’s global chief
investment officer. “The Brexit vote outcome will be a primary
source of volatility, particularly in the short term, but also in
the coming months as the process unfolds. Longer term, volatility
is likely to remain a feature of markets as they contend with
broader global growth concerns, the capacity of central banks to
stimulate economies and other geopolitical events including
elections in the US and across Europe.”
Mastering Volatility
SSGA notes that investors may want to consider volatility
strategies that limit downside risk but allow them to potentially
participate in upside risk. Managed or low volatility strategies
continue to hold promise, and alternatively, target volatility
triggers can provide a capped volatility level in portfolios.
“We began the year predicting that political uncertainty and
structural factors meant that volatility would be a market feature
for some time,” said Lori Heinel, SSGA’s chief portfolio
strategist. “This has proven true over the first half of 2016 and
may likely continue through the rest of the year. As ever, the best
time to take out insurance is before you need it.”
Projections Downgraded for US Interest Rates
After raising rates in December 2015 for the first time since
2006, the Federal Reserve has been unable to follow up on its
initial hike due to weakness in some US data and uncertainty about
economic conditions abroad.
“We now anticipate just one rate hike this year, most likely in
December. Moreover, we think the risks around the hikes projected
in the Fed’s dot diagram for next year are skewed to lower for
longer,” said Christopher Probyn, SSGA’s chief economist. “Because
of the current asymmetries in monetary policy, the Fed has limited
ammunition to respond to a downside surprise and is therefore keen
not to make the mistake of tightening too much too soon.”
“Overall, we believe the low-growth environment we were
preparing for has indeed persisted, and that means investors need
to either recalibrate their return objectives or be prepared to
take on far more risk and complexity,” concluded Lacaille. “We
continue to advocate revisiting allocations, integrating factor
exposures to boost returns where possible and uncovering new and
efficient forms of alpha generation. Diversifying across a number
of factors to squeeze more out of the portfolio remains an
attractive approach.”
The full Global Market Outlook report for the second half of
2016 can be found here.
For further insight into some of the immediate and longer-term
impacts of Brexit for global investment markets, click here.
About State Street Global Advisors
For nearly four decades, State Street Global Advisors has been
committed to helping our clients, and those who rely on them,
achieve financial security. We partner with many of the world’s
largest, most sophisticated investors and financial intermediaries
to help them reach their goals through a rigorous, research-driven
investment process spanning both indexing and active disciplines.
With trillions* in assets, our scale and global reach offer clients
access to markets, geographies and asset classes, and allow us to
deliver thoughtful insights and innovative solutions.
State Street Global Advisors is the investment management arm of
State Street Corporation.
*Assets under management were $2 trillion as of March 31,
2016. AUM reflects approx. $32.6B (as of 3/31/2016) with respect to
which State Street Global Markets, LLC (SSGM) serves as marketing
agent; SSGM and State Street Global Advisors are
affiliated.
Important Information:
Investing involves risk including the loss of principal.
This document may contain certain statements deemed to be
forward-looking statements. All statements, other than historical
facts, contained within this document that address activities,
events or developments that SSGA expects, believes or anticipates
will or may occur in the future are forward-looking statements.
These statements are based on certain assumptions and analyses made
by SSGA in light of its experience and perception of historical
trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances, many of
which are detailed herein. Such statements are subject to a number
of assumptions, risks, uncertainties, many of which are beyond
SSGA’s control. Please note that any such statements are not
guarantees of any future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements.
The information provided does not constitute investment advice
and it should not be relied on as such. It should not be considered
a solicitation to buy or an offer to sell a security. It does not
take into account any investor's particular investment objectives,
strategies, tax status or investment horizon. You should consult
your tax and financial advisor.
All material has been obtained from sources believed to be
reliable. There is no representation or warranty as to the accuracy
of the information and State Street shall have no liability for
decisions based on such information.
State Street Corporation, One Lincoln Street, Boston, MA
02111-2900
Web: www.statestreet.com
© 2016 State Street Corporation - All Rights Reserved
CORP-2061
Exp. Date: 07/31/17
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160712005470/en/
State Street CorporationAndrew Hopkins, +1
617-664-2422Ahopkins2@StateStreet.com
State Street (NYSE:STT)
Historical Stock Chart
From Jun 2024 to Jul 2024
State Street (NYSE:STT)
Historical Stock Chart
From Jul 2023 to Jul 2024