Asset Managers Reposition Portfolios Against Inflation Risks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: seekingalpha
- Portfolio Adjustments: Major asset managers like BlackRock are increasing short positions in long-dated U.S. Treasuries and U.K. gilts, betting that yields could rise if expected rate cuts are delayed, which may impact overall market confidence.
- Market Signals: U.S. inflation breakevens have surged to multi-month highs, and inflation swaps indicate stronger price pressures ahead, raising concerns among investors about a resilient U.S. economy and high commodity prices potentially reigniting inflation.
- Diverging Strategies: In the U.S., some managers see inflation easing toward target, while others warn it could exceed 4% by year-end, leading to renewed interest in inflation-protected bonds, despite risks if energy prices fall sharply.
- Global Perspectives: In the euro area, investors largely expect inflation to remain near the European Central Bank's 2% target, while stronger data in the U.K. have cooled expectations for rapid easing by the Bank of England, highlighting significant regional differences in inflation outlooks.
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Analyst Views on BLK
Wall Street analysts forecast BLK stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BLK is 1336 USD with a low forecast of 1218 USD and a high forecast of 1514 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
10 Buy
2 Hold
0 Sell
Strong Buy
Current: 1127.780
Low
1218
Averages
1336
High
1514
Current: 1127.780
Low
1218
Averages
1336
High
1514
About BLK
BlackRock, Inc. is an investment management company. The Company provides a range of investment management and technology services to institutional and retail clients. Its diverse platform of alpha-seeking active, private markets, index and cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives, and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds, separate accounts, collective investment funds and other pooled investment vehicles. It also offers technology services, including the investment and risk management technology platform, Aladdin, Aladdin Wealth, eFront, and Cachematrix, as well as advisory services and solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Asset Managers Reposition Portfolios Against Inflation Risks
- Portfolio Adjustments: Major asset managers like BlackRock are increasing short positions in long-dated U.S. Treasuries and U.K. gilts, betting that yields could rise if expected rate cuts are delayed, which may impact overall market confidence.
- Market Signals: U.S. inflation breakevens have surged to multi-month highs, and inflation swaps indicate stronger price pressures ahead, raising concerns among investors about a resilient U.S. economy and high commodity prices potentially reigniting inflation.
- Diverging Strategies: In the U.S., some managers see inflation easing toward target, while others warn it could exceed 4% by year-end, leading to renewed interest in inflation-protected bonds, despite risks if energy prices fall sharply.
- Global Perspectives: In the euro area, investors largely expect inflation to remain near the European Central Bank's 2% target, while stronger data in the U.K. have cooled expectations for rapid easing by the Bank of England, highlighting significant regional differences in inflation outlooks.
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Retail Investors Show Strong Preference for ETFs
- Retail Investment Trend: According to BlackRock, retail ownership of U.S. stocks has surged to nearly 20% of average daily trading activity, a significant increase from the low single digits prior to the pandemic, highlighting the growing importance of retail investors in the market.
- Popularity of ETFs: ETFs like the Vanguard S&P 500 ETF and State Street SPDR S&P 500 ETF Trust are favored on the Robinhood platform for their low costs and convenience, serving as primary vehicles for gaining exposure to large-cap U.S. stocks, reflecting confidence in overall economic performance.
- Attraction of Bond ETFs: The Vanguard Total Bond Market ETF offers high-quality investment-grade bonds with an average coupon of 3.8%, making it suitable for medium- to long-term investors seeking reliable income, underscoring the importance of bonds in a 60-40 investment portfolio.
- International Market Investment Opportunities: The Vanguard FTSE Developed Markets ETF and Vanguard FTSE Emerging Markets ETF provide investors access to international stocks, and while emerging markets carry higher risks, their long-term growth potential attracts investors looking for diversified investment options.
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