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.
As many had expected, the US presidential election turned into more of a process than an event.
Inflation has moved steadily lower and become more stable globally over the past four to five decades, with average year-over-year G7 headline consumer price inflation down from 8.3% in the 1970s to just 1.5% in the 2010s. A wide range of factors have been linked to the low-inflation environment, including: globalization, demographics, technological change, declining…
Yes, investors should consider making tactical changes because of valuation differentials exacerbated by the COVID-19 pandemic, but they should size them appropriately given elevated uncertainty.
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.
We provide context for the US government recommendation for endowments to divest from Chinese companies, highlight practical considerations if institutions elect to comply, and encourage institutions to reaffirm their approach to investing in Chinese equities.
Yes, investors who have made tactical bets in gold should consider scaling back their positions and locking in some gains.
By considering the return profile of a manager along with its size in the portfolio, active risk provides additional insight to risk management decisions, helps build better portfolios, and contributes to better governance.
No, we still believe China remains an important exposure for investment portfolios. However, US-China tensions will continue to escalate. Investors need to reaffirm both the rationale and implementation of their China investment strategy and must communicate this with key stakeholders. For further reading, please see the “Decoupling” section of Celia Dallas and Wade O’Brien’s “VantagePoint:…
With the initial chaos of the COVID-19 pandemic somewhat behind us but much uncertainty and potential volatility ahead, plan sponsors will be well served by focusing on—and possibly recalibrating—some core plan management elements. These approaches include liquidity management, rebalancing processes and opportunities, governance, and communication.