What is the True Potential Portfolios & Global Markets outlook for 2019?
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Chris Leyland, Investment Director, provides analysis on 2019.
What is the outlook for 2019?
Overall, we are constructive on stock markets as we move into 2019. After 2018’s falls, valuation levels are now at below long term averages for all the main geographies. As a consensus, the managers that we partner with see good fundamentals, strong business confidence and generally accommodative monetary policy. Global growth is slowing but from the exceptional and arguably unsustainable levels seen in 2017. Markets are becoming less sentiment driven and are now moving back to fundamentals.
Federal Reserve policy, the key driver of return for virtually all of last year are now potentially going to pause raising rates in March allowing stock markets room to breathe. The Fed is now taking a data driven approach rather than a policy implementation at all costs stance. This is a cause of comfort for markets.
At an asset class level, overall, we see convergence with other areas catching up with the US. The Emerging Markets look particularly attractive, one of the best performing equity markets in Q4, with investors seeing the value that is clearly on offer from companies, many of which have long been household names in the West. A potentially weakening US Dollar and better US/China relations all add to the investment case.
The UK is clearly undervalued right now and Brexit looks to be coming to a conclusion of some sort of deal. UK equities could offer good returns in 2019 and are clearly an unloved asset class. Europe and Japan both are pricing at good valuations. Japanese structural reform, Shinzo Abe’s tenure and more shareholder friendly attitude all bode well. Europe is starting to deal with last year’s issues with a budget agreed in Italy, although clearly idiosyncratic risks still exist.
Overall, a positive view, cognisant of risk and one of opportunity as asset prices have fallen.
Finally, it is important to emphasise that diversification is the way to navigate through differing market events, spreading risk and not just concentrating on one single geographical area or asset class. With the True Potential Portfolios, we can offer a new higher level of diversification, diversification by fund manager style.
Thank you very much, I would like to take this opportunity to wish you a happy and prosperous year and I will speak to you soon.
This is the final part of a series, watch part 1 (2018 review) and part 2 Brexit