Reflecting on the
performance in 2016

Insights from the portfolio manager’s office

Feb 14, 2017

2016 was a tale of two different markets. Portfolio managers Dennis Stattman and Russ Koesterich discuss how the year started with fears of global recession and rippling deflation, and ended with an optimism for global economy.

2016 was a tale of two different markets. Portfolio managers Dennis Stattman and Russ Koesterich discuss how the year started with fears of global recession and rippling deflation, and ended with an optimism for global economy.

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    Russ Koesterich: Thinking back on 2016 and that very big delineation between the first half and second half, how do you think Global Allocation did?

    Dennis Stattman: Well, I wish we had done better in the first half of 2016. And we certainly got things right in the second half of 2016. Now I look back on the first half the 2016 – it was kind of strange. People got really upset about the possibility of some things happening. Deflation. Recession. The price of oil going down and down and down. And fears just got exaggerated. Too exaggerated. And also the prices of some things got to extreme levels. 10-year treasury at 1.36%. Bunds at -18 basis points. JGB (Japanese Government Bonds) at -8. Those are kind of silly looking prices when you look back. And, it was up to us to avoid being exposed to those things. And I will admit it, we were little bit early in getting out. But we did get our investors positioned well for the second half of 2016. And that’s carrying over into 2017.

    So, we benefitted from being invested in Japanese stocks, being overweight in financials and also limiting our exposure to the bond market which has had a really rough patch in the second half of 2016 and early 2017.

    Russ Koesterich: If I think back, seems like a lot of trends you highlighted while they began in July shortly after Brexit, they all accelerated post the election.

    Dennis Stattman: Yes, they did. And I think part of that was just the surprise of the election outcome. But part of that also is that things weren’t yet priced for the possibility of reflation, for the possibility of stronger growth. And that repricing and those possibilities, now are going to be kind of tested with what’s the reality.

     


MALOX
Global Allocation Fund seeks a rate of return competitive with that of global stocks at a lower level of volatility over a full market cycle by diversifying broadly across the world.
Dennis Stattman, CFA
Portfolio Manager, Head of the Global Allocation Team
Dennis Stattman, CFA, Managing Director and portfolio manager, is head of the Global Allocation team within BlackRock's Multi-Asset Strategies Group.
Russ Koesterich, CFA
Portfolio Manager, Global Allocation
Russ Koesterich, CFA, JD, is a Managing Director and portfolio manager of BlackRock’s Global Allocation Fund. The team is part of BlackRock's Multi-Asset ...