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With bond yields rising dramatically since early 2022, investors have been piling into money market funds and short-term Treasury Bills to get a risk-free return of more than 5%. Although there’s one problem with sitting on cash – no capital growth. As highlighted in our recent blog on cash reinvestment, short-term securities have insufficient inflation-adjusted return to meet ...

Key Takeaways  Higher-for-longer rates drove up long-term rates, pushing the 10-year Treasury yield to its highest point since 2007, marking a significant rise.  Equity markets fell after peaking in July, repricing recession risk.  All risk assets declined this quarter, particularly long-duration bonds, resulting in negative returns across New Frontier's ETF portfolios.   ...

After three quarters of improving economic outlook amid increasing expectations for a painless decline in global inflation, markets and pundits alike have become less optimistic about a soft landing as they reacted to frustration from the Fed. In an unfavorable scenario for stock and bond investors in a quarter with little fundamental change, economic worries increased while in ...

Key Highlights Rising interest rates have led some investors to shift to cash, seeking a risk-free 5% return. Yet, a more effective strategy combines cash with ETFs within an optimized portfolio. An optimized portfolio is engineered to achieve the highest expected return for a given level of risk, making it a superior choice for achieving financial goals compared to holding ...

Do Downgraded Treasurys Still Belong in Your Portfolio? What Does the Treasury Downgrade Mean for Your Portfolio? The creditworthiness of the US Treasury is hugely important – the function of the global economy is built on it. So at first the decision of Fitch, one of three major ratings agencies, to downgrade US debt would seem to matter. But this is old news. Fitch merely do ...

Key Takeaways  The second quarter saw substantial global equity growth, marked by the US and international markets entering technical bull territory.  Large-cap growth stocks excelled, driven by a handful of US mega-cap tech companies, which greatly benefited from the ongoing artificial intelligence boom.  Markets priced out rate cuts by year-end, leading to an overall ...

Most students of modern finance are familiar with the efficient frontier chart, which shows the range of expected returns and risks for optimized portfolios. Because these calculations are performed when the portfolios are constructed, before they are invested, the values on the chart are estimates, almost sure to differ from the observed risks and returns.   An Important Diff ...

Key Takeaways  While the banking crisis was severe, it has directly slowed down the economy, with the impact of tightening credit conditions being equivalent to rate hikes.  Despite the heightened volatility and reversals during the quarter, markets managed the crisis well, with long-duration bonds, large-cap growth stocks and gold leading the markets. All New Frontier ETF ...

In 2022, numerous unprecedented events led to a decline in asset prices across all markets, resulting in an historic decline in global investment wealth. This scenario is unlikely to reoccur for four primary reasons, which we discuss below. Key Takeaways: 2022 was an historically bad year: the worst in centuries for bonds, and the first time in history when both stocks and ...

Much academic and industry effort has been placed into how to meaningfully divide the equity markets in the US and other countries into parts which behave distinctly, cross-sectionally and over time. Fama and French (1998) were pioneers into dividing US equity markets by ranking on fundamental characteristics, finding important differences in high versus low-ranked stocks along ...