The Narrowing Path
Welcome to the October 2021 edition of our Quarterly Investment Report.
This report is a compilation of the latest insights and expertise from our Independent Advisory Board.
Summary of our latest insights
- The path of least resistance has been higher for many risk assets; however, this path is narrowing as the cycle matures.
- Headwinds have started to build on the back of a solid rebound in economic activity: Higher bond yields, energy shortages, supply-chain & China policy tightening.
- Elevated global inflation levels have been driven by reopening demand and supply disruptions; historically, these factors have proven unsustainable (transitory). However, if they persist long enough, they could undermine the outlook.
- Global equities have had a positive start to the quarter in the face of developing risks, supported by better-than-expected company earnings and negative real yields.
- Tapering of asset purchases is not a tightening of monetary policy. Many central banks will remain accommodative, increasing the resilience of the economic cycle.
- We expect equities to outperform bonds during the reflationary period, albeit with heightened volatility and more moderate gains than the previous 12 months.
- The narrowing path requires active portfolio management to navigate the developing risks; this includes building up Alternative assets with a positive return correlation to inflation and reducing portfolio volatility (private equity, global transport, real assets).
More detail on our views and latest positioning can be found here.
General Advice Warning: The comments do not take account of your objectives, financial situation or needs. Before acting on any general advice, you should consider if it is appropriate for you.
