To visit the MarketEye website please
Despite all the recent discussion about rate rises and normalisation of monetary policy, the investment backdrop remains unprecedented. Through their quantitative easing programmes, for example, central banks are now the backstop for the world’s economy.
Added together, the balance sheets of the Bank of Japan, the Bank of England, the European Central Bank and the US Federal Reserve come to some US$14.4 trillion. To put this in some kind of context, the same four banks’ combined balance sheets stood at just US$2.2 trillion as of the 1 January 1999. This means the balance sheets of central banks have ballooned by more than 650% in under two decades.
The unintended consequences of this kind of intervention by central banks in markets are legion. In fixed income, for example, a full US$8.8 trillion of the world’s bonds trade continue to trade with a negative yield. While this is below the 2016 peak where nearly 30% of the fixed income universe was on a negative yield, we still think it’s staggering to consider how many investors are willing to pay to take on risk.
The potential for rising interest rates, coupled with low and negative yields, makes it all the more important to embrace a new approach to investing. We see the evolution of the multi-asset investment universe that looks beyond the traditional 60/40 equity/bond split as key. By broadening the investment horizon, we believe we are potentially much better placed to weather the economic vagaries of a still uncertain world.
Paul Flood – Newton, a BNY Mellon company
This content is provided by Market Eye, BNY Mellon’s blog. You can register to receive Market Eye updates by using the subscribe function below
Past performance is not a guide to future performance.
Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA or the BNY Mellon funds.
For Professional Clients and, in Switzerland, for Qualified Investors only.
Any views and opinions are those of the author, unless otherwise noted and is not investment advice.
BNY Mellon take no responsibility, nor endorse any comments from third-parties which contain links to external websites outside of those of BNY Mellon.
Furthermore, this material does not constitute an offer or invitation to anyone in any jurisdiction to invest in any BNY Mellon product or use any BNY Mellon services where such offer or invitation is not lawful, or in which the person making such offer or invitation is not qualified to do so, nor has it been prepared in connection with any such offer or invitation.
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries.
This information has been prepared and approved by BNY Mellon Investment Management EMEA Limited. Issued in UK and Europe (excluding Switzerland) by BNY Mellon Investment Management EMEA Limited, BNY ellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. Issued in Switzerland by BNY Mellon Investments Switzerland GmbH, Talacker 29, CH-8001 Zürich, Switzerland. Authorised and regulated by the FINMA.
All information contained in this material is current at the time of issue and, to the best of our knowledge, accurate.
© 2017. BNY Mellon Investment Management EMEA Limited. All rights reserved.
This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from BNY Mellon. It is delivered on an “as is” basis without warranty.
This article was provided by BNY Mellon Investment Management and does not necessarily reflect the views of Citywire