There should be no better month than this for catching up on some reading. Ideally you will be on holiday somewhere far from the world’s financial centres, but if you’re anything like us the markets will still be somewhere on your mind.

 

So I thought it would be an opportune moment to share some of my favourite recent blogs from my most august colleagues in case you missed them the first time.

 

Economics and politics

 

Politicians, and the central bankers they are putting ever-more pressure on, have been inescapable of late. We think the rest of the year is unlikely to bring much respite, so we recently updated our medium-term outlook. Tim Drayson, our head of economics, explains why he is now more worried than he has been since the euro-area crisis but notes that the barriers to negative interest rates in the US may be lower than commonly believed. This side of the Atlantic, meanwhile, our senior European economist Hetal Mehta believes the arrival of the new president of the European Central Bank heralds the changing of Lagarde. Turning to Brexit, our strategist Chris Jeffery reckons that if you’re on the beach and contemplating a surf, you may not be the only one facing a total wipeout. Hetal has also warned that a weak pound may not necessarily boost UK exporters.

 

Portfolio strategy

 

Politics may be tumultuous, but our commitment to thinking about portfolio construction remains constant. As our head of multi-asset funds John Roe explains in this vlog, this often leads us to being contrarian. What does this mean in practice? Consider our approach to German sovereign bonds, with bunds having been derided by many for their negative yields. But as Chris points out, these negative yields may be justified by the fact that the bund market is disappearing before our eyes. Yet we still see a place for them in portfolios, as John observes, for sterling investors even negative-yielding bunds can offer an attractive carry.

 

Within equities, a few weeks before US regulators confirmed they were opening antitrust investigations into some of the largest tech companies, our strategist Lars Kreckel urged investors not to panic. He has also written an interesting primer on what Libra means for Facebook and the digital economy.

 

I’m sure many of you are avidly watching the currency markets to try and save a few quid on your holidays this summer. If you want to step back, read our currency strategist’s latest blog on what has been driving the lack of volatility in FX markets of late and what to expect going forward. He has also tackled the currency manipulation machinations between China and the US.

 

Elsewhere in LGIM

 

I also wanted to bring to your attention a couple of pieces from outside our Asset Allocation team. Let’s start with a puzzle. Which of the following portfolios would you feel more comfortable owning? 1,000 equally weighted assets, each with an annual volatility of 10% and each 50% correlated to every other asset in the portfolio. Or just two equally weighted assets, each with an annual volatility of 10% but with a correlation of zero to one another.

 

You have probably guessed that the optimal answer is the counterintuitive one, but this blog sets out both the power of uncorrelated risk and the importance of ensuring even uncorrelated risks are rewarded.

 

Elsewhere, our colleagues in Corporate Governance outlined why LGIM’s Climate Impact Pledge isn’t just about fossil fuels; we must press every company – not just those in the energy sector – to meet this era-defining challenge.

 

A book for the beach

 

Finally, from outside LGIM altogether, I wanted to pass along a book recommended to me by our departing CEO Mark Zinkula as a ‘must read’. ‘The Island at the Center of the World: The Epic Story of Dutch Manhattan and the Forgotten Colony That Shaped America’ by Russell Shorto is fascinating for those interested in history, the foundations of the United States, and the glory days of the Netherlands. What’s not to like?

 

And it may not be available just yet, but LGIM’s very own Fadi Zaher has written a book on factor-based investing. Admittedly it can’t be described as leisure reading, but it is definitely a vital textbook for all practitioners and investors in alternative beta strategies.

 

With that, happy August to you all!