Value is emerging across the global equity space. Investors' disdain for equities is quite high. That usually means it’s the time to buy.
Astoria is turning constructive on risk assets after being skeptical last year. We are a buyer of risk assets at these valuation levels. We prefer systematic, rules-based, and multi-factor strategies.
We are attracted to US companies with strong ROE and ROA (i.e. high-quality stocks).
On the international front, we are attracted to value, quality, and low volatility strategies which are dynamically currency hedged. In particular, we like Emerging Markets (which per consensus have the highest earnings growth rate in 2019 and the amongst the lowest P/E Ratio).
In Fixed Income, Astoria prefers ultra-short duration & higher quality bonds for now. We are concerned about the supply/demand imbalance for bonds in 2019.
We believe investors should look at alternatives which are return generators, as well as risk reducers. Merger arbitrage is our top alternative idea for 2019.
When the world was swimming in a world of liquidity, buy and hold was the right strategy. We no longer believe that strategy will work as the Fed normalizes its balance sheet, global economies decouple, and policy risk remains elevated. Don’t be afraid to be tactical and dynamic in 2019.
And of course, we will be including alternatives to soften our portfolio volatility. That is, after all, Astoria’s ‘True North’.
Click here to read the 10 ETFs for 2019
Best, John Davi
Founder & CIO of Astoria
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