BNY Mellon Wealth Management Appoints Head of U.S. Markets, Hires 6 Staff in California and Chicago

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BNY Mellon Wealth Management Appoints Head of U.S. Markets, Hires 6 Staff in California and Chicago
CC-BY-SA-2.0, FlickrArriba, de izda. a dcha.: Kevin S. Kosmak, Scott Sandee, Kelly Demers, Daniel D. Abbatacola y Joseph R. Schwall, de la oficina de Chicago - Abajo de izda. a dcha.: Thomas Dicker y Marleny Cheshier - Fotos cedidas. BNY Mellon Wealth Management nombra director para U.S. Markets, e incorpora a 6 profesionales en California y Chicago

BNY Mellon Wealth Management has named Thomas Dicker to be Head of U.S. Markets, based in Boston. In his new role Dicker will oversee the 38 wealth offices throughout the US reporting into Don Heberle, CEO of BNY Mellon Wealth Management.

Dicker, who most recently served as the firm’s Chief Operating Officer, is responsible for driving growth and delivering a superior client experience across the firm’s regional markets and has held several other key leadership positions and client-facing roles during his 29 years with BNY Mellon including overseeing the acquisition of the firm’s offices in Toronto, Chicago, and Menlo Park.

California

The firm has also hired Marleny Cheshier as a senior wealth manager in its Newport Beach wealth management office. Cheshier reports to Michael Silane, senior director of portfolio management. The Newport Beach office has experienced strong growth serving high net worth clients in Orange County and the broader Southern California market. Prior to joining BNY Mellon, Cheshier was at Northern Trust for 18 years, where she most recently served as a vice president and senior portfolio manager.

Five additional staff in Chicago

BNY Mellon has also hired Kevin S. Kosmak for a newly created team leader and senior wealth manager role and named Scott Sandee as senior wealth director. The firm also appointed Kelly Demers as vice president and residential mortgage banker. It named Daniel D. Abbatacola as underwriter in life insurance premium lending, and Joseph R. Schwall as senior private banker.

The additions to the Chicago office are part of the firm’s strategic hiring initiative in important wealth markets and bring the total size of the Chicago office to 35 professionals, an increase of 350% since BNY Mellon opened its doors there in 2010.

BNY Mellon Wealth Management’s growth strategy here in Chicago and across the country is to continue to recruit and develop the best talent in the industry. We’re delighted to welcome Kevin, Scott, Kelly, Dan and Joe to our expanding Chicago office,” said Michael DiMedio, Chicago regional president. “They join a team that offers BNY Mellon’s exceptional wealth management services to our ever-expanding client base.”

Kosmak and Sandee report to DiMedio, while Demers reports to Managing Director Erin Gorman. Schwall reports to Regional Director William McKinley and Abbatacola reports to Rebecca Ryan, head of private bank life insurance lending.

Kosmak comes to BNY Mellon from Northern Trust, where he served for more than 13 years and was a senior portfolio manager and team leader. He holds a bachelor’s degree in business with a concentration in finance and a bachelor’s in accounting from the University of North Texas. He has a master’s in business administration with a concentration in financial analysis from DePaul University. He is a member of the board of the St. Edward School in Chicago, and is active with the Skokie Amateur Hockey Association.

Sandee was previously employed as a private wealth advisor for BMO Private Bank and, before that, as a wealth strategist with Northern Trust. He holds a bachelor’s degree from Northern Illinois University in DeKalb, Ill., and is a resident of Wilmette, Ill.

Demers joins BNY Mellon from JP Morgan Chase where she was a private client mortgage banker. She has nine years of financial services experience and a bachelor’s degree with a concentration in mathematics from the United States Military Academy at West Point, N.Y. She is a member of the board for the West Point Society of Chicago, the National Louis University Veteran’s committee and IL State Treasurer’s Veteran’s Advisory Committee.

Prior to joining BNY Mellon, Abbatacola was employed as a senior underwriter with Northern Trust. Earlier he was with Cornerstone National Bank and Trust Company. He holds a bachelor’s degree with a concentration in finance from Northern Illinois University, and resides in Plainfield, Ill.

Schwall joins BNY Mellon from Northern Trust, where he held several key positions over his 27 years there. He earned a bachelor’s degree in economics from the University of Illinois at Urbana-Champaign and is an active member of the Juvenile Diabetes Research Foundation and the Have Dreams autism awareness organization. 

 

BMO Global Asset Management Launches Global Absolute Return Bond Fund

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BMO Global Asset Management Launches Global Absolute Return Bond Fund
Foto: id . BMO Global Asset Management lanza el fondo Global Absolute Return Bond

BMO Global Asset Management has launched the BMO Global Absolute Return Bond fund further strengthening its absolute return offering for retail and institutional investors looking for attractive levels of potential return in today’s low-yield environment. The fund is a UCITS SICAV domiciled in Luxembourg and the Financial Conduct Authority recognizes it. It is a liquid investment strategy with daily dealing available.

BMO Global Absolute Return Bond fund’s investment approach is unconstrained by a benchmark or particular maturity, credit rating band, sector or geography, but has strict risk limits. A long bias, combined with the ability to go short rates and credit, gives greater flexibility and downside protection.

Investment in global credit is combined with thematic overlays within the portfolio to provide diverse sources of return within a disciplined risk management framework. The core credit portfolio is a ‘buy and maintain’ strategy which focuses on exploiting persistent anomalies in investment grade and high yield securities and is well diversified with over 100 issuers to reduce risk. Thematic overlays contribute to return and aid diversification through active management of credit, interest rate and currency risk. Disciplined risk management is used across the portfolio to calibrate risk up or down as necessary.

BMO Global Asset Management’s Fixed Income team in London manages the fund. The lead managers are Keith Patton and Ian Robinson. Strategic decisions across each of the underlying strategies are delegated to experts in global credit, currency, rates and risk management.

“The fund aims to deliver stable returns whilst having a different profile to that of global bond markets,” said Keith Patton, co-manager of the BMO Global Absolute Return Bond fund. “The combination of multiple strategies, working together, provides investors with the opportunity for a smoother overall return profile over time relative to traditional investments. In addition, the unconstrained approach allows for greater diversification across strategies and for the investment teams to target areas where they have the greatest conviction.”

Ian Robinson, co-manager of the BMO Global Absolute Return Bond fund, added: “The focus on shorter dated credit securities reduces the cyclicality generally associated with longer maturity bonds.”

The launch is part of the continued drive to build BMO Global Asset Management’s offering to, and coverage of, wholesale and institutional clients across EMEA over the past year.

“We are seeing huge demand from our clients for absolute return strategies, as they look for solutions that can provide greater certainty of outcome and positive returns in a challenging market environment,” said Mandy Mannix, Head of Client Management, BMO Global Asset Management (EMEA).

Foreign Investment Funds Post Stunning Growth in Southeast Asia

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Take-up of foreign investment funds has trumped the lackluster mutual fund industry growth in Southeast Asia in 2015, Cerulli Associates found in its recently released report Asset Management in Southeast Asia 2016.

While year-on-year growth of mutual fund assets under management declined from 21.2% in 2012 to 6.4% in 2015, foreign equity fund assets in Thailand surged from THB111.1 billion (US$3.1 billion) in 2014 to THB226.2 billion in 2015. In Malaysia, wholesale feeder assets nearly quadrupled from MYR812.5 million (US$188.8 million) in 2014 to MYR3.1 billion in 2015, and private unit trust foreign exposure increased from 14.9% to 16.8% over the same period.

“Despite these spectacular growth rates, assets of foreign-invested feeders in Thailand and Malaysia have largely been concentrated in the hands of the larger players or among the few biggest funds,” said Manuelita Contreras, an associate director at Cerulli in Singapore. The US$1.5 billion feeder fund assets managed by J.P. Morgan Asset Management in Thailand and Malaysia, for example, mainly came from four of its funds: JPMorgan Global Healthcare Fund, JPMorgan Global Income Fund, JPMorgan ASEAN Equity Fund, and JPMorgan Asia Pacific Income Fund.

Meanwhile, in the Philippines, no less than 13 foreign-invested feeder funds and two funds of funds were launched as of end-2015 since feeder fund unit investment trust funds were first introduced in late 2013, while at least four Indonesian managers have launched foreign-invested Shariah-compliant funds as of April 2016.

“For foreign managers looking to engage third-party fund distributors in Southeast Asia, a long-term track record and global brand recognition will come in handy, though we understand that Thai managers are also open to appointing less well-known managers,” said Contreras. Southeast Asian managers also generally prefer to work with fund managers with an Asian presence and a shorter turnaround time.

Are Negative Interest Rates Positive?

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Negative interest rates– though unsettling for many – can actually be an economic boon, according to a new study by National Center for Policy Analysis  (NCPA) Senior Fellow David Ranson.

“Low interest rates are not in themselves bad for the economy. Indeed, the same can be said of high interest rates; financial markets cannot operate efficiently unless rates are in line with expected inflation and, at times, deflation,” says Ranson.

The study points to Switzerland as an example of naturally negative interest rates. “To their own surprise, the Swiss accomplished it by maintaining an exceptionally strong currency, now roughly at par with the dollar.  Life went on,” writes Ranson. “The Swiss currency has long been one of the strongest anywhere, and inflation has been low and sometimes negative for years. It is negative right now, but it is mostly market forces that drove Swiss nominal interest rates below zero. Indeed, in these hitherto rare cases where prices are consistently on the decline, it is natural for nominal rates to be negative.”

While there are mental, cultural and institutional barriers to negative interest rates, there are no economic barriers to negative interest rates, adds Ranson. “However inconsistent it may seem at first, there is no inherent conflict between opposing the Fed’s former zero interest-rate policy and cautiously welcoming negative interest rates, in the event that deflationary conditions last.”

What Should a Financial Centre Do to Avoid Being Perceived as a ‘Tax Haven’

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What Should a Financial Centre Do to Avoid Being Perceived as a ‘Tax Haven’
CC-BY-SA-2.0, FlickrFoto: Investopedia. ¿Qué debe hacer un centro financiero para evitar ser percibido como un paraíso fiscal?

What should a financial centre in danger of being perceived as a ‘tax haven’ do to manage the outpouring of potentially damaging headlines? The Global Financial Centres Index (GFCI) indicates that the ratings of these centres tend to rely largely on the perceptions of people involved in financial services. These perceptions are affected by press coverage and the work of the Organization for Economic Co-operation and Development (OECD) and other international bodies.

In GFCI 19, published in March 2016, the Caribbean centres of the British Virgin Islands, the Cayman Islands, Bermuda and the Bahamas all suffered significant declines in their ratings with Panama showing a larger decline than any of them. The British Crown dependencies of the Isle of Man and the Bailiwicks of Jersey and Guernsey had a similar experience with Gibraltar, Malta, Monaco and Liechtenstein completing the picture with downgrades of their own. Looking back over the last three years, almost without exception, all of the Caribbean centres and the Crown dependencies have moved in the same direction in the GFCI – moving up together and down together clearly affected by the feelings and perceptions of the industry at the time of the survey.

If this were not unfortunate enough, the recent scandal has undoubtedly led to the deepening of these negative perceptions. In the light of the recent adverse publicity as a result of the ‘Panama paper’ leaks, what should a financial centre, which is likely to be drawn into the debacle do? For Trinidad and Tobago, there are three obvious options:

  1. Lie Low and stay under the radar – it is likely that many centres will decide that in the face of such a media storm, it is best to lie low and stay out of the news as much as possible. This is perhaps understandable and may be a viable short term strategy.
  2. Protest – several centres proclaim their innocence. In the current climate these protests of “it’s not us!” do not gain much sympathy. Several of the centres protesting the loudest do not deserve much sympathy!
  3. Differentiate – a valid longer term strategy is to become a different type of financial centre. Encourage finance for good purposes and make it much harder for money launderers and tax evaders to operate in your territory so that when the next wave of bad publicity arrives (as it surely must), you can genuinely hold up your hand and claim that you are different.

The newly formed financial centre of Trinidad and Tobago is being developed using global standards and best practices and will have a modern, principle based regulatory framework which will be supported by enforcement action against firms that breach the legislation and regulations. This model has already been used to successfully establish the Dubai International Financial Centre. The legislation for the Trinidad and Tobago IFC has been drafted and is awaiting approval by legislators.

Turkey’s Coup Attempt

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On July 15th 2016, a fraction of the Army mostly medium rank officers, had undertaken a coup attempt and seized airports, bridges, TV stations and military headquarters, before attacking the Turkish parliament, leaving the building charred and damaged, and have reasoned to seize power to protect the democracy from the Government.

A number of government officials, including President Erdogan and Prime Minister Yildirim, spoke to the media through FaceTime, saying the coup attempt was staged by military officers that are affiliated with Gulen movement. Prime Minister Binali Yildirim and Erdogan named the attempt as ‘uprising’ and perceived it as an attack to democracy.

Erdogan and the mosques called people to take to the streets and stand against the coup. People reacted strongly and took over the streets. Within a couple hours police forces took control and restored the order in most places. People walked on top of tanks and chanted against the coup. Also, several high rank military officers from different parts of Turkey strongly expressed their opposition against the coup and sided with the government.

The government and Erdogan claimed that Gulen movement to be responsible from the failed coup attempt, while Gulen movement rejects this claim and indicates they don’t even know the army forces who had undertaken the attempt, while also condemned the coup. The claim is that there will be High Military Council meeting during August 1-4, in which President Erdogan is expected to expel a group Gulen supporters from the Army.

On Saturday, July 16th the Parliament convened with an extraordinary meeting and all the members of parliament from the secular/social-democrat CHP (Cumhuriyet Halk Partisi), nationalist MHP (Milliyetci Hareket Partisi) and left-wing HDP (Halklarin Demokratik Partisi) opposed the coup attempt, and there were no one who supported.

Sadly, 200 people were dead and more than 1,500 wounded in the aftermath of the failed coup attempt and another crackdown on the group’s supporters has begun. More than 2,800 military personnel were arrested and more than 2,600 judges are laid-off and arrest orders for 140 Council of State members, more than 48 High Court of Appeals members and five HSYK (High Council of Judges and Prosecutors) members are released.

As expected, President Erdogan calls US to extradite Fethullah Gulen again while US officials requested for solid evidence that Gulen is involved in the coup attempt.

What could be the consequences?
The unsuccessful coup attempt will make President Erdogan more powerful now and Turkey is closer to presidential system. There are still question marks whether there will be early elections but the possibility increased significantly. AKP (Adalet ve Kalkinma Partisi – Party for Justice and Development) supporters were on streets throughout the weekend and it looks like the unsuccessful coup attempt would increase AKP’s popular support, which may also trigger the early election possibilities.

On the macro side, the failed coup attempt may have negative impacts on consumption and investment appetite and the struggling tourism sector probably will take another hit. After hitting above 3.0 levels against US Dollar, the Turkish Lira recovered of some of its losses during the weekend.

Deputy Prime Minister Simsek and the CBT (Central Bank of Turkey) Governor Murat Cetinkaya made conference call with the investors on Sunday evening and indicated that the Government has room in the budget and they don’t think there will be permanent negative consequences on the growth of the economy. The CBT also provided some measures to be taken to minimize the market impact. Accordingly, it was announced that the Central Bank will provide banks with needed liquidity without limits and the commission rate for the intraday liquidity facility will be zero. The bank further announced that market depth and prices will be closely monitored and all measures will be taken to ensure financial stability, if deemed necessary. The central bank is scheduled to hold a policy meeting on Tuesday, where the market expects no change in the policy rate.

Erdogan’s full stance and response when all the dust settles down will be more crucial than ever this time for the economy. In addition, the failed coup attempt showed that there cannot be a coup in Turkey anymore and paves away the concerns over any military intervention going forward.

Equity market impact looks inevitable at this stage with the political turmoil. Although the Deputy PM & CBT Governor made efforts to sustain confidence for the foreign investor community and the recovery in the TRY, equity market is likely to seen off to a negative opening.

Column by Erste AM written by Sevda Sarp

2016, the Year of Gold

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2016, the Year of Gold
CC-BY-SA-2.0, FlickrFoto: PublicDomainPictures / Pixabay. 2016, el año del oro

Financial markets are vulnerable to unpredictable events that shake the international geopolitical stage. The most recent example was the outcome of the UK referendum on European Union membership. As noted by the International Monetary Fund (IMF) in its Global Economic Prospects report, “the negotiations on post exit arrangements would likely be protracted, resulting in an extended period of heightened uncertainty that could weigh heavily on confidence and investment, all the while increacing financial market volatility.”

This and other political uncertainties in the developed world, such as the outcome of the US presidential elections or the fact that Spain has been unsuccesful in defining its government, result in the need for diversification of portfolios.  That is, lay investor’s eggs in several baskets and favor safe-haven assets.

2016 is on track to be the year of gold. In the first three months of the year, gold increased in value by 22%, resulting in its best quarter in 30 years. During this period, deposits of listed products invested in this metal reached 22 billion. Just in the week following the UK’s referendum, investors allocated $2.5 billion to ETPs with Gold exposure. While European equities have had a negative year. The heightened noise we see in the markets is likely to continue so adding a hedge such as gold, could dampen volatility.

Beside the temporary circumstances, there are a number of structural factors ensuring gold’s long-term price stability, such as the proliferation of bonds with negative performance as well as the pace of the US interest rates.

One of the most relevant funds in this area is the BGF BlackRock World Gold Fund. In order to maximize the total profits of their investors, this fund invests more than 70% of its total assets in shares of companies around the world whose main activity is the extraction of gold. The fund may also invest in shares of companies whose predominant economic activity is the mining of other

HSBC Private Bank Names Joe Abruzzo as Business Head of North America

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HSBC Private Bank Names Joe Abruzzo as Business Head of North America
CC-BY-SA-2.0, FlickrHSBC Private Bank nombra a Joe Abruzzo director del negocio de Norteamérica - Foto cedida. HSBC Private Bank nombra a Joe Abruzzo director del negocio de Norteamérica

HSBC Private Bank today announced the appointment of Joe Abruzzo as Business Head of North America.

In this role, Abruzzo will be responsible for driving and executing HSBC’s strategy for private banking across North America, particularly in the US, a key market for HSBC Global Private Bank. He will also serve as a member of the HSBC Global Private Bank Executive Committee.

Based in New York, Abruzzo will report to Marlon Young, Regional Head of Global Private Banking, US & Latin America.

“This is an exciting time for Joe to join the Private Bank,” said Young. “We’re growing our business in the US and as we look to build on this momentum, Joe’s deep commercial and investment banking experience will help us to further capitalize on our strategy to be the Private Bank of choice to the owners and principals of HSBC’s corporate clients.”

With over 30 years in banking, Abruzzo most recently served as HSBC’s Head of US Large Corporate Banking. He joined HSBC in 2014 as Head of Northeast Corporate Banking and in early 2015 was named Co-Head of US Corporate Banking. Before that, he spent 26 years with JP Morgan Chase in various senior leader roles in Commercial and Corporate and Investment Banking.

Young added, “We continue to invest in our people, products and services in the US and I’m also personally delighted that we are able to develop local US talent within HSBC.”

 

Private Equity Women’s Initiative Aims to Increase Number of Women in the Sector

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Private Equity Women’s Initiative Aims to Increase Number of Women in the Sector
CC-BY-SA-2.0, FlickrPrivate Equity Women’s Initiative busca incrementar la presencia de mujeres en el Private Equity - Foto facilitada por NAIC. NAIC presenta una Iniciativa para incrementar la presencia de mujeres en Private Equity

The National Association of Investment Companies (NAIC), the industry association for diverse-owned and emerging private equity firms and hedge funds, recently announced the commencement of the Private Equity Women’s Initiative to increase the number of women entering and advancing in the private equity industry.

A partnership between the NAIC and the American Investment Council (AIC) recognized that women are grossly underrepresented in the industry, making up just 10 percent of senior employee ranks in private equity. The difficulties women face in surmounting barriers into the industry is compounded by the challenge of effectively navigating their way towards senior level positions.

To achieve its objectives, the Private Equity Women’s Initiative will publish relevant research, as well as host educational forums, networking events and mentoring programs. A Working Committee comprised of 11 senior women from NAIC and AIC firms created the Initiative’s Guidelines and Best Practices, a framework for promoting recruitment and retention of women.

The Working Committee consists of: Kelly Williams (Chair), Senior Advisor, GCM Grosvenor; Maura Allen, Private Equity Fellowship and Program Manager, Robert Toigo Foundation; Lauren Dillard, Managing Director and Head of Investment Solutions, Carlyle Group; Daphne Dufresne, Managing Member, JBD Holdings; Martina Marshall Edwards, Former Director of Alumni & Alternative Investments Programs, SEO; Nia Gandy, Marketing Manager, GP Investments; Audra Paterna, Director of Human Resources, Silver Lake; JoAnn H. Price, Co-Founder/Managing Partner, Fairview Capital; Sarah Roth, Partner, The Riverside Company; Patricia Winton, Principal, Strategy and Human Capital, Arclight; Alisa A. Wood, Partner, KKR.

“We believe that the guidelines and best practices developed by the steering committee will provide meaningful tools to firms who are committed to improving gender balance,” says Kelly Williams, Chair of the Private Equity Women Investor Network and Chair of the Women’s Initiative Steering Committee. “I am very impressed by the efforts made by AIC and NAIC member firms to address this important issue.”

“NAIC is delighted that our collaboration with the AIC will positively contribute to more women having the opportunity to develop long, vibrant and rewarding careers in private equity because the industry worked to become more inclusive in our policies and practices,” says Robert L. Greene, President & CEO of the association. “We continue to believe that no group or demographic holds a license or monopoly on talent, rather talent is evenly distributed amongst all people!”

Low Yields and High Equities Cannot Last Forever

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The S&P 500 Index clambers to ever new highs. Over the past couple of weeks, this has even been accompanied by rising bond yields. But we remain far from normality: 10-year U.S. Treasury yields have climbed by almost 25 basis points from their trough of two weeks ago, and the German 10-year Bund yield is up by a similar amount, and yet that “jump” still only took the yield in Germany a shade over zero.

Rock-bottom bond yields are consistent with the new global growth outlook published by the International Monetary Fund last Tuesday. It cut its 2016 forecast from 3.2% to 3.1%, and its 2017 forecast from 3.5% to 3.4%. These numbers assume benign Brexit negotiations. Without that, the IMF reckons global growth could tumble to a mere 2.8% for the next two years. Meanwhile, there’s an attempted coup in Turkey, seemingly non-stop terrorist attacks in Europe, and some kind of experiment with reality-TV politics going on in the most important economy in the world.

What are we to make of this conundrum of record low bond yields and record high prices for equities?

No Flight from Risk, But No Embrace of Risk, Either
Investors still appear willing to take risk, but this remains a very unloved equity-market rally, led by defensive sectors such as consumer staples and utilities, or by income generators such as REITs and MLPs. High-yield bonds and emerging market debt have also fared extremely well this year. When government bond yields and growth expectations are so low, and there is fear about market volatility, investors willing to take on risk in search of return may have a bias to income rather than solely capital appreciation.

Investing this way is understandable. For investors willing to move further out on the risk-return spectrum, there are some attractive alternative sources of yield outside of lower-risk traditional fixed income. Around two-thirds of S&P 500 Index stocks offer a higher yield than that of the 10-year U.S. Treasury. Every stock in the world out-yields the German Bund. My colleagues in fixed income tell me that if you calculate the price-to-earnings ratio for the 30-year U.S. Treasury it comes out at 50 times. That shines a flattering light on U.S. utilities yielding 3.5% with a trailing P/E ratio of 20 times. One could easily imagine that reaching 25 times or more with bond yields at current levels.

‘Bond Proxies’ That Are Not Bonds
But there is an obvious danger in thinking about equity income as a “bond proxy.” Having an income component does not mean investments, such as dividend yielding equities, are “bond proxies.” Equities have an altogether different risk-return profile than fixed income and are much further out on the risk-return spectrum. We know all too well that the value of equities can decline much more significantly than the price of most bonds. A big sell-off could wipe out almost a decade of income from a 4%-yielding stock—in fact, it may imply that this income isn’t going to be paid at all.

What could trigger such a change in market sentiment? Joe Amato has discussed the way low bond yields push up equity P/E ratios, arguably making them look more expensive than they really are. Another way to think of this is that lower yields, and therefore lower discount rates, bring the value of future earnings forward in time. If we don’t believe that earnings will grow, there is less incentive to wait patiently to receive earnings years into the future, because much of their value is already priced into the present value of the asset.

This should heighten an investor’s sense of caution, especially if one thinks interest rates are going up again. But equally, if one anticipates significant deflation and rates falling much further, earnings priced in today may not be realized in the future. At some point, holding onto these assets requires investors to believe in some kind of benign environment—not severe enough to threaten your earnings, or so severe that the authorities will intervene on an unprecedented scale to protect them.

End-of-Cycle Excesses Cannot Last Forever
That is not fundamentals-based investing, but this environment makes fundamentals-based investing a challenge. The market is sending contradictory signals and at some point those signals are going to come back in line, one way or the other. If we see evidence of real, sustainable growth, we may begin to be more constructive on equity risk. Until then, from a fundamental multi-asset standpoint, we favor remaining neutrally positioned, prepared for a downturn in sentiment without giving up too much of the upside.

“Barbelling” a portfolio can help, perhaps by pairing some higher-yielding bonds, higher dividend-paying equities, and, for those able to lock up capital for some time, some private market investment, with very liquid high quality assets that can be monetized and redeployed when volatility creates opportunities.

But banking on ever more aggressive central bank interventions such as “helicopter money,” or some kind of magical perpetual multiple expansion, could be a mistake. End-of-cycle excesses can last longer than anyone anticipates, but they cannot last forever.

Neuberger Berman’s CIO insight by Erik L. Knutzen