We expect global earnings growth will be below average next year, as prior interest rate hikes increasingly bite. With this backdrop, we expect value equities will outperform, Chinese equity underperformance will correct, and Healthcare may present an overweight opportunity.
We expect most investors should maintain equity allocations in line with policy targets. Consistent with this idea, we believe investors with portfolios that are more diversified across risk exposures will tend to fare better than investors holding more correlated investments.
Yes. We believe the attractiveness of UK government bonds has improved relative to just a month ago.
Thoughtfully, if at all. At this stage most investors should examine portfolio risks related to the war and monitor market developments.
Global equities have returned more to investors than high-quality global bonds in nearly three quarters of the last 30 years. The margin of outperformance during those years has been considerable, averaging 12.5 percentage points. That high historical success rate, along with our view that healthy economic activity will support both positive earnings growth and risk appetite, leads us to expect that equities will yet again outperform high-quality bonds.
This chartbook reviews the dynamics at play and includes global commentary on the recent inflation rate spike.
Today, the US Bureau of Labor Statistics released its monthly inflation report for April, which highlighted that prices paid by urban consumers for a basket of goods and services increased by 4.2% relative to the same month last year.
As 2020 comes to a close, we expect some key investment drivers to persist into next year. While our views speak to many different challenges confronting investors, including the poor bond yields on offer, the fate of US-China relations, and where to find growth, they are rooted in the belief that 2021 will be a year of healing for the global economy.
Economic, market, and healthcare circumstances have been extraordinary over the last six months. However, attractive opportunities exist. We see appeal in tech and tech-enabled businesses but remain cautious on elevated pricing. There’s enough value in relatively cheap segments of public equities to justify taking measured, diversified overweights. We are broadly cautious on credit, but see pockets of opportunity in some segments less supported by central bank activity. Finally, the importance of investing in social equity and diversity has been brought into sharp relief by this crisis.
No, we’re optimistic about this diverse collection of companies, and we think investors without dedicated allocations should establish toe-hold positions in developed markets (DM) small-cap equities funded from DM mid- to large-cap peers.