Asset Owner

For more than a century, it has been “very unwise” for investors to position themselves against the United States, according to professor Paul Marsh of London Business School. The US is likely to remain dominant in terms of market size in the future, but its outperformance may well be coming to an end, he argues.
Today, US equities account for nearly two thirds of global market capitalization, and the world’s largest bond market sits in the same jurisdiction.

This week’s people update includes news from law firms DLA Piper and Herbert Smith Freehills Kramer, as well as appointments at RBC Bluebay, JP Morgan Asset Management, Anthos and Blackrock.

With the restoration of the negative correlation between equities and bonds, the structure of strategic asset allocation is once again under debate among asset owners and asset managers. Was the shift away from the traditional 60/40 portfolio towards a permanent allocation to private markets a lasting course correction — or merely a temporary response to an extraordinary period? Investment Officer spoke to four leading investment professionals.

The sharp rise in the Swiss franc following U.S.–Israeli strikes on Iran has brought an issue back into focus that many believed had been settled: negative interest rates in Switzerland.

Stocks follow earnings per share. Over the long term, the correlation between earnings growth and share price performance is as high as 98 percent. Everything else is noise. Macro fears, geopolitical tensions, quarterly results that fall short by a fraction — in the long run, they hardly matter. What counts is how much a company earns and how those earnings develop over time.

Oil and gas prices rose sharply on Monday as investors assessed the implications of U.S.-Israeli airstrikes on Iran and Tehran’s retaliation, with markets focused on whether the conflict risks widening.

Markets enter the week facing not simply another geopolitical headline, but the prospect of a structural energy repricing. After US-Israeli strikes killed Iran’s supreme leader and Tehran retaliated across the region, investors are bracing for a sharp adjustment in oil and gas markets when trading resumes. The issue is no longer whether risk premia rise, but how disruptive and persistent they may become. “The implications for energy markets and commodities, especially for crude oil and LNG flows, are asymmetric and could trigger severe market reactions very soon,” said Cyril Widdershoven, a senior advisor at Blue Water Strategies.

When a US private credit fund closed its exit window to investors, confidence immediately came under pressure. The question is no longer just what went wrong, but whether the mechanisms underpinning these semi-liquid funds are functioning precisely as intended.

AI is not a bubble by definition. But the investment wave surrounding it is. The first hairline cracks are now clearly visible, and comparisons with the run-up to the global financial crisis are becoming hard to dismiss.

Washington is rewinding the clock on investor protection. Under chair Paul Atkins, the U.S. Securities and Exchange Commission has rolled back a series of rules, scaled back enforcement and curtailed shareholder rights. According to former senior counsel Benjamin Schiffrin, who spent nearly two decades at the agency, the regulator is now siding more with Wall Street than with investors.