Outlook 2021

Who will pay the bill? 
Or how country selection will be key

Amid our general optimism about a global recovery, a number of issues call for careful country differentiation: indebtedness and capacity to pay the bills incurred by the pandemic. We will continue to scrutinise the political landscape carefully.

The Green Marshall Plan
A wave of green infrastructural investment

Cyclical, infrastructure-related companies, particularly those that meet environmental criteria, are set to gain extra impetus in 2021 as governments rebuild their economies in the wake of the covid crisis.

Losers’ revenge
Would the companies worst hit by the crisis make a comeback?

In 2021, we expect the unleashing of pent-up demand will benefit a range of consumer-related and other cyclical sectors that suffered especially hard during the pandemic.

The resurgence of Mergers and Acquisitions
How hedge funds may benefit

The extremely low cost of funding and brightening economic outlook are major incentives for M&A. As companies and whole sectors respond to a fast-changing corporate and economic landscape, deal activity could be both offensive and defensive.

Emerging markets are back
Equities and bonds primed to succeed

Emerging markets are set to benefit from a lessening (or at least a stabilisation) of trade tensions, a weakening of the US dollar, a rise in commodity prices and initiatives such as the Regional Comprehensive Economic Partnership in Asia.

The death of sovereign bonds
Negative returns ahead

After declining in response to the pandemic (and dipping further into negative territory in the case of German Bunds and other European bonds), sovereign bond yields are set to remain stubbornly low.

Three convictions in credit
Careful credit selection is of the utmost importance

With credit spreads moving back down closer to pre-pandemic levels, 2021 should be a year for bond pickers.

The bond king is dead
Long live the currency king

With prolonged low (or even negative) yields meaning that government bonds offer portfolios a very thin cushion, it might be worth considering currencies as an alternative ‘shock absorber’ and portfolio diversifier.

Positive on real assets
Why are they worth looking at

Real assets such as real estate will continue to play a bigger role in portfolio diversification strategies in 2021.

Play it again, Sam
Some of the previous big themes are still alive

We believe that sustainable investing and treating volatility as an asset class in its own right remain even more relevant themes than before.