Asset Classes Explained: Global Equity Pera On The Issues

Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, Everestex review forecast or prediction. Realizing these growth projections would provide a notable performance catalyst given the low level of starting valuations. Index performance is for illustrative purposes only and is not indicative of any specific investment. During more positive rate environments in which the ECB policy rate was greater than 0.50%, the forward one‑year excess return for value versus growth was an impressive 4.40%. Interest rate policy from the European Central Bank (ECB) is another dynamic that may favor international value versus growth.

Gmo Global Equity Allocation Fund Class Iii

A favorable monetary backdrop, relative valuations, and the potential for fiscal stimulus to boost gross domestic product growth support a scenario in which value may continue to perform well versus growth. Growth outperformed value for approximately 15 years between 2008 and early 2023, with the outperformance accelerating with the 2020 pandemic. January 1, 2000, through April 30, 2025.Past performance is no guarantee or a reliable indicator of future results. When the ECB policy rate was equal to or below 0.50% during this period, the one‑year forward excess return for the MSCI Value Index averaged ‑3.20% versus the MSCI Growth Index. However, this was not the case for their international stock allocations, with international large‑cap value notably underweight in advisor allocations.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice.

Extensive Capabilities Of An Overlay Program: More Than Meets The Eye

That kind of performance helps ensure PERA can continue providing retirement and other benefits to Colorado’s public employees. The benchmark PERA uses for its Global Equity asset class is an index called the MSCI ACWI IMI with USA Gross. Jim Liptak, Director of Equities at PERA, said there are many benefits to managing the majority of assets internally, the biggest of which is the cost savings. The largest single asset class is Global Equity, which makes up more than half of PERA’s total fund.

Products

Right now, that hateful piece of the equity allocation is global stocks. Net returns are gross returns less effective management fees. Deep experience and fundamental research that drive sustainable, risk-adjusted returns over the long-term. Investing entails risks, and there can be no assurance that Parametric (and its affiliates) will achieve profits or avoid incurring losses. Parametric provides advisory services directly to institutional investors and indirectly to individual investors through financial intermediaries.

• Such an unlikely occurrence vividly illustrates the potential impact that regionally misaligned portfolios can have.
• Past performance is not indicative of future results.
• January 1, 2000, through April 30, 2025.Past performance is no guarantee or a reliable indicator of future results.
• In a world where the performance differentials can be +/-10% in a given quarter, seemingly small differences in allocation can matter a lot, and investors can’t afford to take unintended bets.
• A Middle Eastern endowment sought to overhaul its several-hundred-million-dollar global equity allocation following a decade-long period of underperformance versus the global equity benchmark (Dow Jones Islamic Market World).
• Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

Asset Classes Explained: Global Equity

The information on this website does not constitute an offer to sell, or a solicitation of an offer to purchase, securities in any jurisdiction to any person to whom it is not lawful to make such an offer. Certain solutions discussed in these materials will be subject to minimum investment amounts and other restrictions that apply. You also confirm that you are a qualified institutional investor or a consultant to qualified institutional investors and wish to proceed.

• J.P. Morgan Asset Management’s Long-Term Capital Market Assumptions suggest developed international stocks may produce better annual returns than U.S. equities over the next 10 to 15 years.
• Whether tariffs remain in place, or are revoked or implemented in another form, the ultimate impact to the global economy is still uncertain.
• Parametric provides advisory services directly to institutional investors and indirectly to individual investors through financial intermediaries.
• Realizing these growth projections would provide a notable performance catalyst given the low level of starting valuations.

How Much Of Your Portfolio Should Be In Non-us Stocks?

The Equities team achieves its diversified investment portfolio by using a combination of active and passive management strategies. By relying on internal equity asset management, PERA saves tens of millions of dollars in external manager fees every year. Broadly defensive positioning had successfully mitigated downside risk but contributed toward negative relative returns. Over time, global investing has improved diversification for disciplined investors, and we believe allocations should be maintained despite recent underperformance and the troubling outlook. Global equities currently have a negative annual return, which history says could be a precursor to outperformance in the next five years.

As regional misalignments risk significant performance deviations amid trade uncertainty, let’s look at how overlay management can potentially help to guide global equity portfolios. Customized overlay solutions like managing regional equity allocations may help to maintain a portfolio’s desired risk and return characteristics and reduce the potential risks presented by uncertain market environments. On the active management side (about 68% of Global Equity assets), the investment professionals on the Equities team assess, buy, and sell stocks in an effort to exceed benchmark returns.

• The benchmark PERA uses for its Global Equity asset class is an index called the MSCI ACWI IMI with USA Gross.
• A more tailored use of overlay programs focuses on more granular allocations within or intra asset classes, aiming to control for risks such as regional misalignments.
• “Expected” or “alpha” return estimates are subject to uncertainty and error.
• References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve.

The dataset for the MSCI World ex-US Index goes back to 1970. Diversification doesn’t work when you deviate from the client’s long-term investment plan. You know your client’s portfolio is properly diversified when there is always a portion of it you hate. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams.

Liquid Markets

The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. There’s also a strategic asset allocation case to be made to diversify international large‑cap equities in a more balanced manner. Mitigating this, however, are the ongoing and significant risks emanating from the global tariff war and its impact on  potential recession scenarios.

• What are the risks of staying concentrated in the U.S.?
• Although the returns of the diversified portfolio are slightly less than those of investing in US stocks, the lower volatility results in a better (higher) Sharpe ratio.
• Prospective investors should consult with a tax or legal advisor before making any investment decision.

Legal

Building an investment portfolio to meet your client’s long-term goals is all about trying to earn the highest return for a given level of risk. Investors who chased performance and made significant shifts in their allocations following the global equity outperformance have recently been burned. It wasn’t that long ago that everyone seemed to hate US stocks and wanted to increase their allocation of global equities (particularly emerging markets). It’s tempting to criticize a strategy based on recent performance, but using global equities as part of a diversified portfolio still makes sense.

You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. J.P. Morgan Asset Management’s Long-Term Capital Market Assumptions suggest developed international stocks may produce better annual returns than U.S. equities over the next 10 to 15 years. While international equities have lagged U.S. stocks over the intermediate and longer term, there may be an opportunity for international stocks to demonstrate better performance and diversify investor portfolios.