Key Investment Themes for 2010
2009 has been an exceptional year in terms of the changing fortunes of the global economy and capital markets. Fears of a second Great Depression in the opening months of the year have given way to signs of a nascent economic recovery, thanks to radical and unprecedented policy stimulus. Predictions for growth in 2010, our own included, have risen significantly in recent months and may yet rise further.
Investors have taken heart from this brighter outlook, with a revival in risk appetite allowing equity markets to recover from the multi-year lows plumbed in March. In fact, in this environment of economic recovery, but with interest rates remaining low, many asset classes – from bonds to commodities – have made progress. After the fraught climate in the first quarter of this year, this more positive turn of events is obviously a welcome relief to us all.
However, while the economy is getting back on its feet, it cannot yet walk unaided, with monetary and fiscal stimulus continuing to serve as a vital crutch. But as the recovery becomes more embedded, policy stimulus will need to be withdrawn and replaced with demand from households and companies. As a result, growth is expected to ease slightly in the second half of 2010 and into 2011 as this difficult transition takes place. So while this "Recovery" phase of the economic cycle should see risk assets continue to outperform government bonds and cash, returns are unlikely to match the gains witnessed over the past nine months.
Our 2010 Investment Outlook details how we expect the economy and the various asset classes to perform over the coming year. It explains our preferences for particular markets and our less positive view of others.
Our investment views are also available to view through a series of video interviews by journalist Asha Tanna with our Global Head of Economics and Asset Strategy, Carl Astorri, and one of our Investment Strategists, Jean-Maurice Ladure. These five videos provide a quick insight into how 2009 compared with our expectations, and outline our macro-economic outlook for 2010. Carl and Jean-Maurice also talk about why having an outlook on the economy matters to investors and provide our predictions for both the traditional and alternative asset classes.
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