The "inescapable truths" one year on: what's changed?

By Lora Benson | Oct 28, 2019
A year ago we identified the disruptive and economic forces that we thought would shape the decade ahead for investors. These were our "inescapable truths". But do they still hold true?

Last year we launched our "Inescapable investment truths for the decade ahead". They comprised a number of economic forces and disruptive factors we thought would shape the investment landscape ahead of us, as well as a guide to how investors might respond.

The original paper is available at the foot of the page.

Here, one year on, we provide a brief update in response to recent events, particularly the turn in global monetary policy.

The Inescapable truths describe an outlook for the world economy of subdued growth and low inflation against a backdrop of disruption from populist politics, technology and climate change. We predicted real interest rates to be low, and that investors would struggle to meet their goals from market beta alone as stock market index returns are likely to be held back by the macroeconomic backdrop.

An important feature of this outlook is that we expected the supportive tailwind from falling bond yields to fade. This would leave equity markets more dependent on earnings growth, rather than the positive effect of falling bond yields on valuations, for return. Consequently, investors will have to be more discerning in identifying pockets of growth and in navigating the impact of disruptive forces on traditional business models. We described this as a shift “from macro to micro”. One year on, we believe these views remain intact.

Read the full article here


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