In 2018, emerging market equities ended the year down nearly 15%. Approximately one-third of that loss was attributable to broad-based dollar strength against most EM currencies. Heading in to 2019, we question whether investors should remain agnostic to managing EM foreign exchange risk.
In 2015, we helped create a strategy that sought to enhance the income profile of the Bloomberg Barclays U.S. Aggregate Index. Today, we bring that same underlying methodology to global fixed income markets. Bradley Krom and Josh Shapiro introduce our new approach and show how going global can mean much more than simple diversification.
Recently, investors may have been lulled into a false sense of complacency amid the current bull market. By anchoring bond portfolios to fundamentals, we believe our approach has the potential to avoid the pitfalls that will likely emerge as we enter the later stages of the credit cycle.
With the debt of numerous high-profile, blue-chip corporations being placed on negative watch, investors are taking another look at credit quality across the U.S. investment grade corporate debt universe. We believe prudent investors should start to assess whether the underlying credit risks in their portfolios are worth taking.
Amid the recent sell-off in risky assets, many investors are wondering if this is a momentary blip or the beginning of a more protracted slowdown. We’ve seen a number of questions about the overall health of the high-yield market. We examine the highest-profile defaults of 2018 and provide some rationale for why a fundamental approach to high yield can potentially avoid the pitfalls inherent in market cap weighting.
Jeremy J Siegel
Senior Investment Strategy Advisor
CEO of WisdomTree
Jeremy Schwartz, CFA
Executive Vice President, Global Head of Research
Christopher Gannatti, CFA
Head of Research, Europe
Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he will be based out of WisdomTree’s London office and will be responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst designation.
Head of Fixed Income Strategy
Tripp Zimmerman, CFA
Head of Fixed Income & Currency
Associate Director, Asset Allocation and Modern Alpha
Head of Capital Markets
Associate Director of Capital Markets
Head of Europe
Joseph Tenaglia, CFA
Associate Director, Asset Allocation
Kara Marciscano, CFA
Jianing Wu joined WisdomTree as a Research Analyst in October 2018. She is responsible for analyzing market trends and helping support WisdomTree’s research efforts. Previously, Jianing completed internships and projects at Geode Capital, Starwint Capital, and Invesco Great Wall Fund Management with a focus in quantitative research. Jianing received her M.S in Finance from the Massachusetts Institute of Technology. She graduated with honors from Boston College with degrees in Mathematics and Philosophy.
Jeff Weniger, CFA
Director, Asset Allocation
Alejandro Saltiel, CFA
Associate Director of Modern Alpha
Alejandro Saltiel joined WisdomTree as a Quantitative Research Analyst in May 2017. He is responsible for quantitative research on WisdomTree’s products and global equity markets. Prior to joining WisdomTree, Alejandro worked at HSBC Asset Management’s Mexico City office as Portfolio Manager for multi-asset mutual funds. He started his career working at a boutique hedge fund that specialized on trading options on sector-levered ETFs. Alejandro received his Master’s in Financial Engineering degree from Columbia University in 2017 and a Bachelor’s in Engineering degree from the Instituto Tecnológico Autónomo de México (ITAM) in 2010. He is a holder of the Chartered Financial Analyst designation.
Matt Wagner, CFA
Modern Alpha Analyst
Matt Wagner joined WisdomTree in May 2017 as a member of the Research team. He is responsible for research on WisdomTree’s products and communicating the firm’s views on the markets. Matt started his career at Morgan Stanley, working as an analyst in Treasury Capital Markets from 2015 to 2017 where he focused on unsecured funding planning, execution and risk management. Matt graduated from Boston College in 2015 with a B.A. in International Studies with a concentration in Economics. Matt is a holder of the Chartered Financial Analyst designation.
When the Federal Open Market Committee (FOMC) voted to increase the Federal Funds Rate by 25 basis points last week, in addition to the first rate hike in more than nine years, this also marked the first unanimous decision by the FOMC since the previous tightening cycle began in 2004.
After nearly two and a half years of debate, the Federal Reserve finally lifted the Federal Funds Rate target by 25 basis points on December 16, 2015. While investors continue to grapple with what impact this might have for markets and the economy, we thought it could be instructive to understand what impact a tightening cycle has historically had on the cost of credit for investment-grade corporations.
The WisdomTree Western Asset Unconstrained Bond Fund (UBND), the first unconstrained bond exchange-traded fund, was launched in June, and we recently had a discussion with Mark Lindbloom, portfolio manager at Western Asset Management Company (Western Asset).
With other major central banks easing and the Fed looking to hike rates, the U.S. dollar strengthened broadly. In fact, the Bloomberg Dollar Spot Index (BBDXY) recently powered through the previous cycle highs of March 2015. With the trend in dollar appreciation potentially resuming, where are markets likely to head next?
After a difficult third quarter for global markets and many of WisdomTree’s strategies, October performance in most markets rebounded strongly. Here, we outline the key themes of the rebound and some important data points investors should focus on in the coming weeks.