Surviving the short term to thrive in the long term

29-10-2018

Sorca Kelly-Scholte

Tim Lintern

Building investor resilience in a downturn

With the U.S. economy firmly in late cycle, investors are concerned. How can they ensure their portfolios survive the short term so they can thrive in the long term? The answer would be fairly straightforward if recessions were all alike and had a predictable impact across markets—but they’re not, and they don’t.

We can’t predict how the next recession will unfold, but we can provide a framework to help investors prepare for the late-cycle risks most relevant to their investment needs and objectives. This article:

Looks back at a range of developed market recession experiences over the past four decades and the resulting sequence of market reactions for each
Looks ahead at four plausible downturn scenarios and assesses potential market responses
Analyzes the likely impact of these scenarios and market responses for different types of investors

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The infographic below uses illustrations to convey the main talking points and areas of interest covered in the article.

1. With the U.S. economy firmly in late cycle, investors around the world are considering the next recession and how to prepare for it.

Building investor resilience in a downturn infographic 1

2. We have developed a framework to help different investors assess their resilience to plausible recession scenarios.

Building investor resilience in a downturn infographic 2

3. Broadly, we believe many long-term investors have improved their fitness level and ability to ride out a downturn, but the risk of fragility remains.

Building investor resilience in a downturn infographic 3

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