Industry Voice: Investment Ideas for the Next 12 Months

Investors will remember 2020 with mixed emotions. On one hand, it was the year of the catastrophic coronavirus pandemic, with its devastating human and economic tolls. On the other hand, it was a year that delivered strong positive returns across a wide range of financial markets—an extraordinary outcome given the destructive economic backdrop. Against such wildly contrasting dynamics, what lies ahead for 2021, and how might investors position their portfolios in response?

Trying to imagine the future is a difficult task in normal times. As the times we are living through are anything but normal, marked as they are by a very high degree of uncertainty, identifying the likely direction of events is even more challenging. Nonetheless, we have identified five key themes we believe will drive the performance of economies and markets over the coming 12 months and beyond:

  1. Post‑pandemic road to recovery
  2. Politics and the pandemic
  3. Policy and low yields
  4. Parting styles amid disruption 
  5. Pricey safety

1. Post‑Pandemic Road to Recovery

The pandemic is impacting markets in multiple ways. One is through its effect on the global economy—both in terms of the current slowdown and the eventual shape of the recovery. We believe the economy will continue to mend, but the recovery is likely to be choppy, potentially including a double‑dip contraction, before the rollout of vaccines is underway. Then, we hope, will we commence a slow return to some normality.

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