A look at relative value for the 2 major asset classes.
Historic valuation measures indicate more risk currently in bonds than stocks. Momentum favors equities over bonds. The macro economic backdrop is likely to be more favorable for equities than bonds. The macro economic backdrop suggests that one should look for yield by taking on more credit risk as opposed to duration risk. The macro economic backdrop, relative value measures and momentum signal a preference for International Equities over Domestic Equities.
- Favor Equities over Bonds
- Favor International Equities over US Equities
- Favor Short Duration Debt over Longer Duration
- Favor High Yield Debt over Government and High Grade Corporate
Equity Momentum
Equity Risk
International Equity v. US Equity: Momentum and Relative Value
Bond Risk
Treasuries, High Grade and High-Yield Corporates:
Projected 12-month returns given 4 economic scenarios
Geopolitical Risks
As always, please feel free to contact me with any questions or concerns.
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For information on Alhambra Investment Partners’ money management services and global portfolio approach, Douglas R. Terry, CFA is reachable at: dterry@4kb.d43.myftpupload.com
This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Past investing and economic performance is not indicative of future performance.
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