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Mid-2021 Investment Outlook

As you look ahead to the second half of 2021, we invite you to explore actionable insights and investment trends across all major asset classes curated from our marketplace of ideas — more than 800 investors strong.

 

Views expressed are those of the authors and are subject to change. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

Encouraged by vaccination progress and policy support, members of our multi-asset strategist team remain confident in their pro-risk stance as they look ahead to the second half of 2021. Yet they are keeping an eye out for inflation concerns, potential spikes in interest rates, new COVID lockdowns and policy mistakes. Strategists on our macro team explore the expansion-sustaining potential of built-up savings among higher-income earners, the possibility of greater country differentiation given varying inflation tolerances and the game-changing potential of climate risk.

Within equity, members of our fundamental factor team believe the setup for defensive factors is as attractive as it’s been in over a decade, while some of our leading technology investors highlight disruptive themes across multiple sectors. EM equity and fixed income investors explore implications of higher inflation in these markets. Our fixed income team outlines a new approach to building a more resilient fixed income exposure amid structural changes that create dislocation in these markets.

Our alternatives experts highlight how structural market shifts and disruption across many sectors have created opportunities for allocators as they look ahead to the second half of 2021.

Specialists from our Sustainable Investment Team provide perspectives on our net zero initiative, enhancing climate disclosures, factoring climate change into asset allocation frameworks, and applying climate research to impact investing.

Sustainability

Mid-2021 Sustainability Outlook

Update on key sustainability initiatives
Carolina San Martin and Andria Weil highlight our progress on key sustainability initiatives as we head into the second half of the year.
Net Zero Asset Managers initiative
CEO Jean Hynes discusses our net-zero commitment, and Wendy Cromwell and Julie Delongchamp explain how we are approaching it.
Building climate resilience within a strategic asset allocation framework
Erika Murphy argues that as climate change drives volatility and dispersion, it could have lasting effects on the risk and return profile of a strategic asset allocation plan.
Jolt from the IEA: what the world needs to do to reach net zero
Jenny Xie outlines key findings from a new report published by the International Energy Agency (IEA) on reaching the Paris Agreement’s 1.5° C goal.

Alternative investment outlook - Gold suspension bridge cables

Alternatives

Mid-2021 Alternatives Outlook

Why fragility is the new reality for the stock market
Gordy Lawrence & Brian Hughes explain the precarious equilibrium in liquidity supply/demand and what it may mean for portfolio construction and investment strategy.
Mission critical: the vital role of alternatives in pursuing investment success
Cara Lafond considers three alternatives ideas for the current environment, including private equity vintages that coincide with market downturns.
Bridging the gap in credit portfolios with a long/short strategy
Chris Perret and Vivian Bi argue that long/short credit strategies could help round out a portfolio of traditional and private credit investments.
Decarbonisation and the future of energy sector investing
Eugene Khmelnik looks at what will drive the outcomes and the potential advantages of a long/short investment approach in an evolving energy universe.

Equity Outlook - Digital currency exchange board

Equity

Mid-2021 Equity Outlook

The fundamental improvement in defensive equity factors
Katrina Price and Gregg Thomas argue that, in hindsight, it is not surprising that defensive equity factors fared poorly during the 2020 drawdown and subsequent rebound — given the unique fundamentals at the time. But looking ahead, they see a potentially attractive entry point for asset allocators.
Widespread tech innovation: don’t miss the forest for the really big tree
Leading technology investors from across our equity platform explore the innovations driving a multi-decade journey of disruption and highlight the importance of in-depth research to capturing this opportunity.

 

Fixed Income

Mid-2021 Fixed Income Outlook

EM inflation has arrived, but will it stick around?
Emerging markets inflation has been top of mind for many investors lately. Gillian Edgeworth, Jamie Rice  and Michael Henry consider the outlook going forward and potential market implications.

Multi-asset Outlook - Printed line graph

Multi-Asset

Mid-2021 Multi-Asset Outlook

Inflation is here: how long, how strong?
Weighing the potential for inflation pressures to threaten the recovery, Nanette Abuhoff Jacobson and Daniel Cook offer their views on the second half of 2021, including what makes European, EM and value equities attractive.
An allocator’s agenda for a reflating world
Nick Samouilhan, Andrew Sharp-Paul  and Matthew Bullock focus on some suggested ”to-do” items for asset allocators.

 
Global Economic Outlook - Birdseye view of downtown office tower

Macroanalysis

Mid-2021 Global Economic Outlook

How the US savings glut could boost the services economy and sustain the expansion
Higher-income earners have pushed the savings rate to heights not seen since World War II, and Juhi Dhawan sees reason to believe that once they begin spending, the economy could benefit for years to come.
What does “good” versus “bad” inflation really mean?
John Butler explains why changes to the economic environment mean the pandemic response may be the start of a new era in monetary policy.
Complex catastrophe: climate change as a national security threat
Climate change has begun to shape domestic and foreign policy and is increasingly recognised as a threat to national security. Thomas Mucha thinks climate’s macro, market and geopolitical implications will be significant.

2021 Annual Outlook collection

For additional perspectives on our expectations for 2021, please visit our 2021 Investment Outlook collection published in late 2020.