Global indicators continue to signal a sharp business recovery from last year’s COVID-19 pandemic lows. While inflation expectations are increasing as a result, business improvements offer multi-asset investors good reasons to remain tilted to equities for the next stage of the recovery.
Having strongly underperformed the wider stock market in 2020, high-dividend stocks have shown early signs of a rebound in recent weeks.
Higher-income assets underperformed in the second-quarter rebound. But that also means there’s pent-up potential in income-generating assets that may begin to show in later stages of the recovery.
The last decade produced great performance across most asset classes. But in the 2020s, we expect investment market returns will be lower and risk harder to manage. Looking forward, a disciplined multi-asset approach will be especially valuable to identify opportunities and help mitigate setbacks.
With the global economy moving into its late-cycle stages, we think it’s a good time to bolster portfolio inflation protection by embracing several recently unloved investments—including natural resources and commodities.
There are a lot of suggestions these days about where to get extra income, but less discussion about the cost attached to it. A diversified multi-asset approach can help—and provide additional growth potential. But how it’s designed matters.
As the new year begins to unfold, the environment for risk assets is still benign: the global economy is strong, monetary policy is accommodative, and volatility is low and steady. At this point, we don’t see excesses developing that could change that.