Timely commentary, strategic perspectives and in-depth analysis from our investment teams to help guide your portfolio decisions.
Despite economic optimism, expressing a risk-on view is likely to be more nuanced in 2021. We favor cyclical equity regions and value as a style. Credit, especially high yield, is still our preferred fixed income asset.
While valuations are much higher and speculative activity is on the rise, our investors take comfort from powerful corporate profit growth and favorable comparisons with exceptionally low bond yields. Within markets, we recommend a balanced approach.
Above Trend Growth is our base case (90%) given stimulus, accelerating vaccinations and likely strong growth. Our top picks: high yield bonds and leveraged loans for returns; European bank capital notes, securitized credit and emerging sovereign debt.
As equity markets hit record highs, the equity value and size factors got a boost, but equity momentum and quality factors plunged. Our outlook remains optimistic while we acknowledge that above-average returns may require a shift in market sentiment.
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