Volatility, Infrastructure and the Definition of Normal – Entasis Newsletter 1Q18

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Section Summary

  • Market Axioms – Stick with big, “easy” decisions and eschew activity. Performance comes, performance goes. Fees never falter. (Limit them.)
  • Market Notes – Markets hate uncertainty. During the first quarter, the markets were presented with the uncertainty of a new Fed Chairman, a potential trade war with China, due to steel and aluminum tariffs, and political stress impacting the technology sector on several fronts.
  • Equity & Fixed Income Comments – Within our foreign equity allocations we continue to have a high degree of confidence long-term in small- and mid-cap equities, as well as emerging markets more broadly. In U.S. equity markets, we continue to favor large-cap companies over small-cap companies, but we do not believe the relative value gap is as large as it once was. On the fixed income side we have less interest rate exposure than our benchmarks, remain underweight corporate credit and are using active management in areas of the market that offer late cycle diversification.
  • Research Focus – Infrastructure debt asset class primer.
  • Client Focus – 2017 was a great year. So far, 2018 has been volatile. What is normal?