Business & Investment

2021 investment market and expert thinking

Fund managers and analysts have put their thoughts on the outlook for 2021 and investors, keeping an optimistic balance, primarily with the advent of the covid-19 vaccine.
“I am broadly positive in 2021” Darius McDermott, Managing Director of Fund Calibre. “We have multiple vaccines offshore. Brexit is somehow completed and there is a US president who is likely to be less anxious.
“Yes, we have a pile of debt, a global recession, and problems should arise along the way … but some of the uncertainty has been removed. To enable recovery. Both the government and the central bank know what they need to do. The world is supportive.
“For me, this means that 2021 is suitable for risk-on assets in both the equity and fixed income markets.”

Investment fund manager interviewed by Investment Company Association Vaccines have also been rolled out worldwide, and the covid-19 threat has receded as the number one cause of optimism next year, with 38% positively emphasizing this. However, according to AIC, managers are also optimistic about the potential of technology to drive economic growth, with 14% each responding to this and value growth rotation.

The investment firm’s manager advised to outperform emerging markets in 2021. Despite many developing economies being hit hard by the pandemic, 24% of managers feel that emerging markets are most likely to reward investors next year, the UK (19%) and the US. (14%).

Managers are bullish in emerging markets and the UK in the long run as well. In the five-year outlook, emerging markets except Japan and the Asia-Pacific region are considered the most attractive opportunities, with each receiving 19% of the votes and the United Kingdom and the United States each second with 14% of the responses. It was.

McDermott is also an emerging market that benefits investors.
“I think the US dollar will continue to fall for some time,” he says. “This will benefit Asia and the wider emerging markets, especially Asia, which generally handles pandemics well and has just signed a new interregional trade agreement. A milder between the United States and China. Relationships should also help. Emerging markets should also be positive, but not as much as seen in recent years. The only exception may be the UK. The positive consequences of Britain’s exit from the EU If so, the UK has a lot to catch up with its peers around the world. “
McDermott proposes to include the following in the endowments to consider: Guinness Emerging Markets Equity Income, Fidelity Asia Pacific Opportunity And AXA Framlington UK Mid Cap

Carlos von Hardenberg, Manager of Mobius Investment Trust, said: “In the coming years, we see even more significant positive economic development, especially in Asia, Latin America and Africa. Last year, it helped accelerate health care costs and investment, and new for distance learning and related technologies. We took a step forward and emphasized the importance of e-commerce as a new physical store. Asia and many emerging markets have made remarkable progress in developing their own technologies, but more sustainable, environmentally and socially. We have also made progress towards an acceptable industry as a whole. Rotation to the emerging markets has led to the normalization of significant discounts in the emerging markets traded today, improving macroeconomic tailwinds for strong corporate earnings. I’m sure it will accompany. “

Best performing sector

Nearly one-fifth (19%) of investment firm managers believe that healthcare equipment and services will be the best performing equity market sector in 2021. In a five-year outlook, managers prefer to outperform travel and leisure companies, with 19% nominating sectors. A strong recovery from the devastating 2020.

Andrew Bell, Chief Executive Officer of the Witan Investment Trust, said: Investing in infrastructure will help accelerate recovery from the 2020 economic shock. Asian consumption, technology and biotechnology remain important long-term themes. In the short term, the banking and travel and leisure sectors could bounce strongly as investors reasonably analyze the outlook rather than estimate the terrible short-term trends from 2020. “

“Large companies have recently outperformed their performance, and in some countries they are not a little helped by the big tech companies that are responsible for about 70% of this year’s rise in the stock market,” McDermott said. “SMEs that paid the price of investor uncertainty in 2020 have relatively attractive valuations and should be successful towards recovery.”
And here he emphasizes ASI Global SMEs, Federated Hermes Global Emerging Markets SMID Equity And BMO Global SMEs

And McDermott suggests that commodities and infrastructure have an edge over large tech companies.
“Big tech companies continue to perform well as they gain momentum in the form of structural changes,” says McDermott. “But we don’t expect the same advantages that were shown in 2020. Instead, commodities and infrastructure look interesting. Both should benefit from economic recovery. Oil is already bouncing back. There is potential, but metal will be key, especially as the promotion of electrification and renewable energy accelerates.
The money to take into account what he says 91 Global Gold, First Sentier Global List Infrastructure And VT Gravis UK Infrastructure Revenue

Investment firm managers expect the biggest threat next year will be rising interest rates (19%), followed by the next highest equity valuation (14%).

According to the AIC, despite the pandemic economic downturn, 90% of managers believe UK interest rates will not be negative in 2021, and 71% will see a significant increase in inflation. I feel “impossible” or “very unlikely”. However, in a three-year view, 77% of managers think that a significant rise in inflation is likely or very likely.

Interest rates also affect growth and value outlook.
“If November tells us something, investors shouldn’t completely cancel their value strategy,” McDermott continues. “The rotation caused by the first vaccine news reminded us why it was unwise to be one style of’all-in’. We believe that growth will work even in a low interest rate environment, but if the portfolio has some value, it can also be rewarded. “
He suggests for value TM CRUX UK special situation, Invesco Asia And Schroeder Global Recovery

And for bonds, he proposes corporate bonds instead of government bonds.
“Development bonds have little upturn in yields or capital. Inflation could be on the horizon, perhaps in 2022, which could also exacerbate the bad situation. I’m eligible for investment. We prefer bonds and high yield bonds. They should provide better yields and better results in a recovery environment. Higher interest rates also leave room for operations on emerging market bonds. “
Funding to consider what he says: Bailey Gifford High Yield Bonds, Blackrock corporate bonds And M & G Emerging Markets Bonds

Where will the FTSE 100 end in 2021?

Investment firm managers are optimistic about the outlook for the global equity market, believing that 67% will rise in 2021 and only 10% will fall. Almost two-fifths (38%) of managers feel that the FTSE 100 will end between 6,500 and 7,000 next year. One-third (33%) were more optimistic about the UK Best Equity Index, with 7,500-8,000 (19%) and 7,000-7,500 (14%) being the next most popular options.

Finally, AIC reported that in the year the pandemic affected everyone’s lives, 62% of managers reported that covid-19 increased investors’ interest in ESG.

Steve Cook, Portfolio Manager for the Sequoia Economic Infrastructure Income Fund (SEQI), said: “2020 is a difficult year for all of us, and it is undeniable that widespread economic uncertainty is damaging the market. For next year, there are still many uncertainties, but to ESG. Certainly there is increasing attention. The covid-19 crisis is accelerating the transition to sustainability, and companies across the country are calling for green recovery, and these issues are arguably the top priority for investors. We look forward to continuing to implement our ESG policies and playing every possible role in enabling the transition to a low-carbon world. “

References: Survey on Emerging Market Outlook for Investors

2021 investment market and expert thinking 2021 investment market and expert thinking

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