As an active manager, we believe that insight and understanding are the keys to investment success.Some of the biggest factors moving markets today are the shifting monetary policies of central banks and the changing political landscape. Our investment experts help you understand what it all means for our investment outlook and what it could mean for your portfolio.
After months of strong outperformance, US markets may face new challenges, including a resurgent coronavirus and political uncertainty. Our US Investment Strategist has three ideas for investors seeking diversification and growth potential: sustainable investing, private-market debt, and securities in Asia and Europe.
The risk/reward profile of corporate bonds is less attractive now than when the coronavirus crisis began. Since then, bonds from higher-rated firms have been buoyed by central bank support. As the credit cycle turns, we suggest prioritising both issuer and security selection to seek outperformance – potentially with fallen angels and secured bonds.
Research indicates that a more even gender balance among employees can enhance corporate performance, but only one in nine directors at Japanese companies is female. Our engagement project on gender diversity aims to find out why progress has not been faster, and to encourage the wider adoption of any initiatives to help close the gap.
Data is sometimes called the “new oil” given its integral role in the functioning of the world’s economy. But how safe is this data? As more business activity and social interaction moves online – particularly in the wake of the coronavirus pandemic – companies’ approach to cyber security is being scrutinised. Through a dedicated engagement programme, we’re helping to influence companies’ policies and best practices in this area.
With equities rallying more than 30% since late March, driven most recently by cyclicals, financial markets were perhaps due for a period of consolidation. New risks could emerge, but we continue to believe in the ongoing economic re-opening story – so cyclical sectors may remain market leaders in the near term. Markets could be supported further as elevated levels of cash are put back to work.
Despite the impact of the coronavirus pandemic, and continuing tensions with the US, China remains on course to become the world’s largest economy by 2030. This could represent the coming decade’s most transformative development in global financial markets – and a major opportunity for investors.
The financial markets reacted to the coronavirus with an unprecedented first-quarter drop, then turned around quickly. This appetite for risk in the face of the deepest recession since the 1930s is quite unusual, but the markets are being driven by optimism about potential economic improvement down the road – so we can’t exclude a further rise in equity prices.
When fears of the new coronavirus seized hold of markets in early March, already low government-bond yields fell to record levels amid a historic “flight to quality”. Given the impending global recession, government bonds will likely continue to be attractive for now – although their yields will be low and liquidity concerns will make them volatile. But over the long term, we favour spread products such as investment-grade and high-yield corporate bonds.