Bernstein’s common ‘black ebook’ of funding analysis has been staple studying on some Wall Road desks for many years. In 2002, Fortune mentioned they had been “snapped up like best-selling romance novels”. Right here’s the most recent one.
The lead creator is Inigo Fraser-Jenkins, an analyst at Bernstein behind bangers like The Silent Street to Serfdom: Why Passive Investing is Worse Than Marxism, and former black books together with Are We Human Or Are We Dancer? 15 essays on the character of investing.
This version is unfortunately much less catchily-titled, and easily referred to as A Painful Epiphany: Investing in a Put up-Pandemic, Put up-World World, and explores the current regime shift in monetary markets and its broader implications. Right here’s Bernstein’s reasoning:
The “painful epiphany” referenced within the title of this black ebook is the prospect of decrease actual Sharpe ratios. This implies various things to traders relying on what sorts of liabilities they’ve. For these with strictly nominal liabilities, the rebasing of yields over the past yr has offered some respite. Nonetheless, for these with actual liabilities, similar to outlined contribution pensions, sovereign wealth funds, endowments, and people saving to satisfy their very own objectives, an adjustment in allocations continues to be to return.
The principle level of this black ebook is to stipulate what we see as the important thing traces of debate for allocators and traders in coming years.
One is pressured to conclude that strategic asset allocation now issues in a means it hasn’t for a very long time. We’re all taught that it’s crucial funding resolution, however traders have usually simply paid lip service to that sentiment for a number of many years. In any case, public equities and public bond markets had handsomely crushed inflation, with a adverse correlation between them.
Whereas traders have been very centered on the near-term penalties of the current inflation shock, the required change to strategic allocations to regulate to longer-run greater inflation has solely simply begun. This leaves us with a sequence of particular motion factors for traders to contemplate, and a sequence of deeper factors by way of methodology and the framing of funding choices.
Anyway, test it out for yourselves. As ordinary there’s loads of attention-grabbing stuff to get caught into.
The report — authored by Fraser-Jenkins and colleagues Alla Harmsworth, Robertas Stancikas, Harjaspreet Mand and Maureen Hughes — explores subjects just like the hyperlinks between ESG and inflation, the bond comeback, personal markets, (sigh) digital property and (SIGH) a “renewed case for lively administration”.
Anyway, the way forward for the Bernstein black ebook is unclear, after AllianceBernstein mentioned final yr that it will flip the venerable analysis outfit right into a JV with SocGen, which the French financial institution has an possibility to accumulate in full after 5 years.
FTAV would assume that because the flagship property of Bernstein (the black ebook was began by its founder Sanford C. Bernstein). However after being head of quant methods on the analysis outfit, Fraser-Jenkins is now co-head of “institutional options” at AllianceBernstein.
Possibly they’re making a seize for it, or that is only for continuity functions for now. We’ll let you already know if we discover out.
