Global Allocation

A manager’s ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control. The model assumptions are passive only – they do not consider the impact of active management. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making a decision. “Expected” or “alpha” return estimates are subject to uncertainty and error. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. They should not be relied upon as recommendations to buy or sell securities.

As Private Market Secondaries Soar, Investors Must Demand Discipline

Past performance is not indicative of future results. Isolating an example of the S&P 500® Index relative to the MSCI EAFE Index, let’s consider the quarterly performance differential over the past 20 years, with events in the 95th percentile highlighted in green. This reshaping of global trade policy may affect individual economies unevenly.

Learn how we can help investors implement systematic strategies like trend following within an overlay program. These views are subject to change at any time based upon market or other conditions, and Parametric and its affiliates disclaim any responsibility to update such views. Such an unlikely occurrence vividly illustrates the potential impact that regionally misaligned portfolios can have.

Key Factor Supporting International Value: Earnings Growth

Over the last three years, relative earnings growth has changed hands and favored growth equities—another argument for a broadly diversified portfolio exposure. We analyzed rolling three‑year returns and the relative performance of the MSCI EAFE Value Index and the MSCI EAFE Growth Index since January 2000. Diversifying equity exposures across size, style, and geography seeks to enhance performance consistency, which, in turn, could help to lower portfolio volatility. The Equities team utilizes all the tools at its disposal to form a low-cost and well-diversified portfolio of stocks that outperforms the benchmark on a risk-adjusted basis over long time periods.

Performance (%)

Please consult your professional advisers if you have questions about a particular investment or are unsure of the laws and regulations applicable to you. It is not investment advice, nor is it intended to be relied on as a forecast or research and does not constitute an offer, recommendation or solicitation to buy or sell shares in any Fund. Unfortunately, this investment is not available for the investor type and location you have selected. Click “Continue” to visit the pages for Harding, Loevner Funds, Inc., a familyof mutual funds for US investors. This material is provided for general informational purposes only and is not intended to provide legal, tax, or investment advice. This material is provided for general and educational purposes only and not intended to provide legal, tax, or investment advice.

Strategy

Building an investment portfolio to meet your client’s long-term goals is all about trying to earn the highest return for a given level of risk. Investors who chased performance and made significant shifts in their allocations following the global equity outperformance have recently been burned. It wasn’t that long ago that everyone seemed to hate US stocks and wanted to increase their allocation of global equities (particularly emerging markets). It’s tempting to criticize a strategy based on recent performance, but using global equities as part of a diversified portfolio still makes sense.

How Much Of Your Portfolio Should Be In Non-us Stocks?

You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. J.P. Morgan Asset Management’s Long-Term Capital Market Assumptions suggest developed international stocks may produce better annual returns than U.S. equities over the next 10 to 15 years. While international equities have lagged U.S. stocks over the intermediate and longer term, Everestex trading platform there may be an opportunity for international stocks to demonstrate better performance and diversify investor portfolios.

• As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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• While these numbers aren’t predictions, they’re helpful data points based on assumptions about earnings, valuations, currency shifts and dividends.
• It’s important to consider tax and investment implications of holding or exercising your options.
• It should not be assumed that investment in the securities identified has been or will be profitable.

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The Equities team achieves its diversified investment portfolio by using a combination of active and passive management strategies. By relying on internal equity asset management, PERA saves tens of millions of dollars in external manager fees every year. Broadly defensive positioning had successfully mitigated downside risk but contributed toward negative relative returns. Over time, global investing has improved diversification for disciplined investors, and we believe allocations should be maintained despite recent underperformance and the troubling outlook. Global equities currently have a negative annual return, which history says could be a precursor to outperformance in the next five years.

• Morgan advisor to learn more about how to better position your portfolio for potential global market shifts.
• With the IPO market in Europe at a standstill, most companies will exit via mergers and acquisitions.
• Investing entails risks, and there can be no assurance that Parametric (and its affiliates) will achieve profits or avoid incurring losses.
• Over the last three years, relative earnings growth has changed hands and favored growth equities—another argument for a broadly diversified portfolio exposure.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice.

Please refer to the Disclosure page on our website for important information about investments and risks. A more tailored use of overlay programs focuses on more granular allocations within or intra asset classes, aiming to control for risks such as regional misalignments. All investments are subject to risks, including the risk of loss.

Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. Realizing these growth projections would provide a notable performance catalyst given the low level of starting valuations. Index performance is for illustrative purposes only and is not indicative of any specific investment. During more positive rate environments in which the ECB policy rate was greater than 0.50%, the forward one‑year excess return for value versus growth was an impressive 4.40%. Interest rate policy from the European Central Bank (ECB) is another dynamic that may favor international value versus growth.

It is a commonly used benchmark for institutional investors like PERA and is designed to capture 99 percent of the global equity market. Colorado PERA’s investment team, guided by the PERA Board of Trustees’ investment policies and strategic asset allocation, invests plan assets with the primary goal of achieving the best risk-adjusted returns for members. A Middle Eastern endowment sought to overhaul its several-hundred-million-dollar global equity allocation following a decade-long period of underperformance versus the global equity benchmark (Dow Jones Islamic Market World).

• You know your client’s portfolio is properly diversified when there is always a portion of it you hate.
• Certain custody and other services are provided by JPMorgan Chase Bank, N.A.
• Is now a good time to add international equities?
• Net returns are gross returns less effective management fees.
• While the Portfolio is “no load”, management fees and expenses will apply.
• Do international stocks come with more currency risk?