Q2 Investment Outlook: A Strong Start, but Don’t Be Complacent

Here are key takeaways from our latest client-approved Investment Outlook report

  • Investor sentiment improved in the opening months of 2019, but expect worries about trade, Brexit and slowing economic and profit growth to remain sources of volatility.
  • U.S. economic growth is slowing but is stronger than that of other developed markets. Emerging markets (EM) growth is stable and would benefit from easing trade tensions, fiscal stimulus in China and any improvements in developed market growth.
  • With the global economy slowing and U.S. corporate earnings poised to post their first year-over-year decline since late 2017, the environment favors companies benefiting from durable long-term trends that are not tied to the economic cycle.
  • Continued progress in U.S./China trade talks would brighten the outlook for Japan and Europe, which are significant exporters to China. Expect ongoing volatility as long as trade and Brexit are unresolved.
  • The outlook for China is improving due to stabilizing economic readings, economic reforms and greater access to mainland China A-share stocks.
  • We are underweight U.S. Treasuries as yields rise and are finding more compelling opportunities among select securitized, corporate and EM bonds.
  • With the potential for volatility rising as macro issues play out, investors can take a more defensive posture with alternative strategies designed to reduce downside risk or deliver uncorrelated performance.
  • We’re taking a slightly more cautious approach to the equity positions in our multi-asset portfolios after a strong stock rally to open the year. We’re favoring U.S. over non-U.S. developed and EM stocks, and prefer large-caps over mid-and small-caps.

Read the full report

Important Notices and Disclosures

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

Generally, as interest rates rise, bond prices fall. The opposite is true when interest rates decline. International investing involves special risks, such as political instability and currency fluctuations. Historically, small- and/or mid-cap stocks have been more volatile than the stock of larger, more-established companies. Smaller companies may have limited resources, product lines and markets, and their securities may trade less frequently and in more limited volumes than the securities of larger companies. References to specific securities are for illustrative purposes only, and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

American Century Investments uses a multifactor stock-ranking model incorporating a variety of stock attributes, which fall into four categories or factor families: valuation, growth, quality, and sentiment. Diversification does not assure a profit nor does it protect against loss of principal.

Alternative mutual funds that hold a variety of non-traditional investments also often employ more complex trading strategies than traditional mutual funds. Each of these different alternative asset classes and investment strategies have unique risks making them more suitable for investors with an above average tolerance for risk. As with all investments, there are risks of fluctuating prices, uncertainty of dividends, rates of return and yields. Current and future holdings are subject to market risk and will fluctuate in value.

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