Third Quarter 2022 Asset Allocation Report by David Wolf, David Tulk and Ilan Kolet: Modelling Behaviour
While macro-economic models are widely used across the investment industry, the ability to understand what may be wrong with them and position investments accordingly may help outperform the markets. In their latest paper, the GAA team discusses how they are taking advantage of model-driven consensus to enhance return in a risk-controlled way for Canadian fundholders.
- Understanding how macro models will be wrong is key to our process
- Standard models were predictably blind to the supply constraints that have driven the inflation surge
- Those models may now be too worried about US recession risk…
- … but not worried enough about Canada’s higher interest-rate sensitivity