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Andy Sparks
Managing Director, MSCI Research
About the Contributor
Andy Sparks is a Managing Director and Head of Portfolio Management Research. Previously, Andy was responsible for Fixed income Research Strategies. Prior to joining MSCI, he was Head of Product Management at Barclays Capital for the POINT portfolio analytics platform. He had joined Lehman Brothers in 1995, serving in a number of senior positions. Andy has an M.A. in Economics from the University of Chicago and a B.A. in Economics from UCLA.
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Blog posts by Andy Sparks
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BLOG
Climate Transition and Bonds: Risk or Opportunity?
Feb 23, 2021 Bruno Rauis , Juan Sampieri , Andy SparksThe transition to a low-carbon economy could significantly redirect the flow of investments toward greener companies and technologies that limit carbon emissions. We consider the potential risk — and opportunity — for bond investors.
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Investor Reaction to US Elections and COVID-Vaccine Progress
Nov 18, 2020 Dimitris Melas , David Lunsford , Andy SparksTo gauge investor expectations after Joe Biden was declared winner of the U.S. election and good news broke about COVID vaccines, we surveyed 151 U.S.-based financial advisers. We examine the advisers’ views on the next 12 months and markets’ reaction since Election Day.
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Chinese Government Bonds: Higher Yield, Less Risk?
Nov 12, 2020 Greg Recine , Juan Sampieri , Andy SparksGlobal investors’ interest in Chinese government bonds has risen, as these bonds offer higher yields than developed-market sovereign debt. For investors thinking about adding Chinese bonds to their portfolios, what could be the impact on portfolio risk?
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Will Interest Rates Surge? Evidence from Options Markets
Nov 3, 2020 Greg Scheuer , Andy SparksWith long-term interest rates near record lows, conventional wisdom suggests that they can only go up. But the interest-rate option markets seem to be telling a different story — that rate decreases are also a distinct possibility.
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Aggressive actions by central banks and soaring government budget deficits have raised concerns among some investors that inflation may significantly rise. We examine whether an inflation hedge was worth the cost over the past 13 years.
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Did Bonds Deliver? Leveraging Fixed Income During the COVID Crisis
Jul 29, 2020 Juan Sampieri , Andy SparksInvestors may employ leverage with lower-risk asset classes such as bonds to seek higher risk and returns. We assessed the effects of leverage on the returns of three hypothetical multi-asset-class portfolios during the COVID-19 crisis.
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Surging Corporate-Bond Supply: Reason to Worry?
Jul 1, 2020 Andy Sparks , Gergely SzalkaIn the months since the onset of the COVID-19 pandemic, companies issued a large amount of corporate bonds. As a result of this surge, corporate debt has grown substantially — a burden that institutional credit investors may wish to monitor closely.
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Dramatic declines in oil prices, the Federal Reserve’s aggressive monetary policy and higher fiscal deficits may create a confusing outlook for U.S. inflation. We examine what the market is telling us about where inflation may be heading.
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How could coronavirus impact credit markets?
Mar 25, 2020 Juan Sampieri , Andy Sparks , Thomas VerbrakenWhile newspaper headlines are focused on volatile stock markets stemming from the COVID-19 pandemic, credit markets are not immune. Our latest stress test asks, “What would it mean for portfolios if losses reached 2008 levels?”
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Something for nothing? Increasing bond duration may not increase portfolio risk
Nov 20, 2019 Juan Sampieri , Andy SparksAsset allocators may consider lengthening the duration of their bond portfolios to prepare for a potential recession in the U.S. But could duration extension push risk above target thresholds? Maybe not.
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Home bias in fixed income: Has it helped or hurt?
Jul 29, 2019 Andy Sparks , Anikó MarázHas global diversification historically helped reduce risk in the fixed-income portfolios of U.S. defined-benefit (DB) pension plans? Our backtests show that globalizing bond allocations would have increased risk measured relative to a liability benchmark. For such plans, home bias in bond portfolios would have reduced active risk over the period of our study.
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A consensus has emerged that the Federal Reserve will lower rates in the coming months, but investors remain uncertain over the timing and magnitude of the cuts. What impact could three rate-cut scenarios have on markets?
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Could the Federal Reserve Board (the Fed) become less independent, with political forces exerting more influence?
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Listen as MSCI’s Andy Sparks discusses potential implications of the US Federal Reserve’s sharply softening monetary policy, and whether the role of central banks has changed.
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Despite the recent rally in the U.S. government bond market, real U.S. bond yields (i.e., nominal yield minus the market-implied rate of inflation) still remain substantially higher than at the beginning of the year. This may be both a blessing and a curse for investors.
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A remarkable calm has settled upon the U.S. bond market, with interest rate and inflation risk now at their lowest levels of the decade. This optimistic sentiment was underscored at the annual Jackson Hole, Wyoming conference where Federal Reserve (Fed) Chairman Powell highlighted that there is “…no clear sign of an acceleration (of inflation) above 2% and there does not seem to be an elevated risk of overheating.”
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For many years now, stock and bond returns have consistently moved in opposite directions. But the timing of selloffs earlier this year in the bond and equity markets combined with inflation concerns and higher interest rates have market participants asking whether the relationship has changed.
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Many investors may have only a qualitative understanding of the ability of indexed fund managers to track the returns of a fixed-income index. Our analysis uses tracking error to provide a quantitative measure of the ease – or difficulty – of consistently tracking an index.
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With employment generally strengthening and inflationary pressures rising, fixed income markets are increasingly focused on central banks tapering bond purchases and ultimately retiring their quantitative easing (QE) programs. Key questions now facing institutional investors include: What has been the impact of the QE programs? How much of this impact could be reversed as the programs are eventually wound down?
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Convertible bonds have “bonds” in their name but in reality they are complicated corporate securities with risk characteristics that often have little to do with straight bonds. Are they more like stocks or bonds? And how can investors evaluate and model them?
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Analyzing Credit Strategies from a Risk and Return Perspective
May 3, 2016 Andy SparksUnderstanding the performance of credit portfolios is essential in explaining a strategy’s merits to clients and prospects.
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Asset managers look at both risk and return in their portfolios. However, it is not always so easy to report and analyze risk and performance attribution on the same platform and along the same dimensions. This type of integrated ex‐ante and ex-post analysis can be carried out in BarraOne, MSCI’s multi‐asset class, multi‐currency, risk and performance analysis platform.
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