Financial Services

BlackRock’s 2018 investment themes have been refreshed against a backdrop of steady global growth and strong corporate earnings, but rising macroeconomic uncertainty.

Many investors are discovering they can no longer rely exclusively on the old bond trading model to meet all their liquidity needs. Seismic regulatory shifts have reduced large banks’ balance sheets, constraining their ability to hold inventory and support market liquidity. As a result, it has become harder and more costly for investors to source bonds and to quickly adjust their portfolios.

Image: Most investors are familiar with equity index investing, but less so with indexing in fixed income. As a result of this lack of understanding, a growing number of publications are questioning the validity of bond indexing.

Image: The number of financial products currently available to portfolio managers is impressive, with some of today’s instruments offering enhanced liquidity and eased access to the underlying markets.

Image: The institutions participating in the Greenwich Associates 2017 U.S. ETF Study are preparing their investment portfolios for the return of volatility and the shift to a rising interest rate environment.  As part of those efforts, they’re increasing their use of ETFs and integrating the funds into more sophisticated portfolio applications.

Image: In the Q2 2018 Global Investment Outlook, BlackRock details the asset class preferences and highlights two key risks to the global expansion and risk assets: the potential for trade wars in the face of rising U.S. protectionism and a spike in real yields.