New Asset Class Coverage In 2019

This post provides a brief look at some of the new areas of coverage initiated over the year.

I take pride in my track record and aspiration for constant innovation and development of my craft, and one part of this is expanding coverage of the asset classes I look at for clients. This is partly guided by my own interest, partly by following the trail of noteworthy setups/opportunities, partly from conversations with clients on the road, and partly as a direct request from clients in emails.

I already have a growing research agenda for 2020 both within existing and new areas of coverage, so it will be interesting to see if I can match or go one better on my 2019 job. But for now, I invite you to take a brief look at some of the new areas of coverage I built out last year.

1. Frontier Markets

As part of including frontier market equities in the Capital Market Assumptions, the initial indicator build-out included this interesting breadth chart below which has a rather familiar pattern showing up. I've also scraped together valuation data, and some basic macro indicators.

2. EM Sovereign Bonds

I've been tinkering away on a few models in this space, but one of particular intrigue is EM sovereign CDS pricing. Indeed, it's interesting to see how EM sovereign risk pricing has relaxed, a lot.

3. EM Ex-Asia Equities:

One question I asked myself before getting to work on analyzing emerging markets ex-Asia as a group was "is it even worth it?"... in other words, is there even a material enough historical variation in relative performance to justify trying to time allocations within EM? The chart below provides a bit of visibility on the swings in relative performance within EM, and at times it can be quite significant.

4. A-REITS

Australian REITs -- this one was for my Aussie & Kiwi clients. I already do extensive work on global REITs (and US REITs), and I was little surprised to find AREITs expensive (much like their global peers).

5. Global Shipping Stocks

I've been tracking global trade closely for a number of years, and figured I should construct a pure-play shipping stock index - partly as a source of macro insights and partly to identify an possible opportunities. Interestingly, the sector seems to be pricing in a rebound in global trade.

6. Gold Miners

I already have a large and growing indicator set for gold, so it was simply a matter of crunching the valuations, breadth, flows, and intermarkets indicators together for gold miners. As it happened, for a brief moment there, gold miners were a contrarian play (given ETF flows).

I regularly revisit these topics from time to time in the Weekly Macro Themes report to either update the view, highlight emerging risks/opportunities, or to further build out the picture as I add to the data/indicator sets. So get in touch if you'd like a trial or indeed if you're after some specific insights.