Research and Market Commentary
Setting a New Course: Institutional Investing After the Crisis
Prudential Investment Management
Description: As fears of a replay of depression-era economics begin to fade into memory, institutional investors have benefited from a sharp recovery across many financial markets. Rebounding markets have rewarded all types of investors, ranging from those who largely left their investments in place to those who opportunistically invested in depressed sectors. However, as institutional investors look ahead, the strong rebound of financial markets coupled with the prospects for a modest, and perhaps fragile, economic recovery is placing institutional investors in a difficult position to chart a course that will meet their needs over the next several years. Read the full white paper.
The “Sweet Spot” Is Still Sweet Today
Prudential Fixed Income Management
Description: What a rally we saw in the high yield market in 2009! Historically, the US high yield market has generated total returns and volatility that have fallen in between investment grade bonds and stocks. This intuitively makes sense: because high yield issuers are below-investment grade and thus riskier credits, their bonds should theoretically provide more return, and exhibit more volatility, than investment grade bonds. At the same time, because of their stated coupon payments and expectation of principal repayment at maturity, high yield bonds should theoretically provide less return, and exhibit less volatility, than equities. Read the full white paper.
PREI Global Outlook
Prudential Real Estate Investors
U.S. Quarterly, January 2010
Description: After two years of negative sentiment, positive indicators have cropped up in the economy and commercial real estate market. The recession ended in the fall and a sizeable pool of capital has been raised for opportunities in commercial real estate, which should keep property values stable. However, caution is in order. Vacancies have climbed for two years due to negative absorption and new supply, and rental income for all property types will be weak until employment grows steadily.
Latin American Quarterly, January 2010
Description: Economic progress that began in Latin America in 2009 should continue into 2010, thanks to government stimulus measures and strong consumer demand created by a steady rise in employment. But most property markets will remain weak until the second half of the year, as demand for space is tepid. The increasing demand for consumer goods and housing should prove to be a boon for the low-income housing and industrial markets.
European Quarterly, January 2010
Description: Europe’s economies have rebounded from the largest collapse in GDP since the 1930's, with growth turning positive for almost every country in the third quarter. Demand for high-quality real estate is growing, which could prompt property values to recover more quickly than anticipated in 2010. Rents may even begin to grow again, particularly in prime locations, but the path will likely not be smooth.
Asian Quarterly, January 2010
Description: Asia rebounded from a wobbly start in 2009, when property values fell and rental rates sagged. Government support to the financial system and growth in economies around the world helped dampen fears that demand for commercial real estate would hit a trough. The region’s economic prospects are likely to be positive in 2010, thereby creating more investment opportunities in the real estate sector.
1st Quarter 2010 Outlook
Prudential Fixed Income Management
Description: Given the deep gloom under which 2009 began, the year turned out to be notable for just how wrong it proved the pundits who had predicted the worst. The US economy didn’t slip into depression, but rather, the Great Recession ended. Businesses didn’t tumble wholesale into bankruptcy, but rather continued cost-cutting and deleveraging, resulting in record profits for some. Most large banks didn’t go under, but instead got their fiscal houses in order, raising capital and even repaying their TARP loans. Consumers didn’t remain under lockdown, but instead cautiously ventured back out to shopping venues, or at least to those offering good bargains. And, closest to home for us, the credit markets didn’t cease to
function, but instead, sensing the world was returning to "normal", turned in some of their best performances on record. Indeed, it was a blockbuster year for credit. Read the full outlook.
Economic and Market Outlook
Quantitative Management Associates
Description: What a difference a year makes. At this time last year, the world economy stood on the edge of a cliff, with investors contemplating the real possibility of financial collapse and worldwide economic depression. Fortunately, Armageddon was not in the cards and the unprecedented stimulus efforts by governments around the world eventually gained traction. Read the full white paper.
Turbulent Teens Ahead?
Quantitative Management Associates
Description: After a tough decade, what should investors look forward to - or fear - in the next 10 years? Will the stock market go back to its usual historical return of about 10% versus zero in the decade just past, or should investors expect something higher or lower, and why? Rea the full white paper. Read the full white paper.
Real Estate Securities Outlook
Prudential Real Estate Investors
Description: PREI believes that publicly traded real estate companies are a compelling investment option for investors looking to capitalize on real estate opportunties and the disruption in the capital markets. Read the full outlook.
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