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2018 Outlooks (Schroders)

December 2017

Thought leaders from Schroder Investment Management provide their outlook on issues that may influence markets and portfolios going forward.


Global Equities 

AlexTedder
SimonWebber

by Alex Tedder, Head and CIO of Global and US Equities, and Simon Webber, Lead Portfolio Manager, Global & International Equities, and Co-Portfolio Manager of Hartford Schroders International Stock Fund

The coming year is likely to be a positive one for global equities, but there are risks. And with valuations at relative highs, there is little margin for investor error.

  • Overall, we remain optimistic when looking at prospects for 2018, but we are cognizant of potential risks
  • The global backdrop is one of reasonable stability with the potential for bouts of short-term volatility
  • Opportunity could lie in well-managed companies that may be better placed to deliver superior returns irrespective of the economic cycle

 

View PDF »

 

Emerging Market Equities 

TomWilson

by Tom Wilson, CFA
Head of Emerging Market Equities and Co-Portfolio Manager of the Hartford Schroders Emerging Market Equities Fund

We believe the outlook for emerging market equities remains positive, although we expect returns to be more modest in 2018. 

  • Thanks to attractive valuations, EM equities generated strong returns in 2017
  • Risks to EM growth in 2018 include China slowdown, tightening global liquidity, and US trade policy
  • On a relative basis, valuations in EMs are still attractive 

 

View PDF »

 

US Small & Mid-Cap Equities

JennyJones

by Jenny Jones
Head of US Small- & Mid-Cap Equities and Portfolio Manager of the Hartford Schroders US Small Cap Opportunities Fund and the Hartford Schroders US Small/Mid Cap Opportunities Fund

The Schroders US Small- and Mid-Cap Team is cautiously optimistic on the outlook for markets in 2018 against a more certain backdrop for economic growth.

  • Relative to large-cap US stocks, we believe smaller-cap companies are fairly valued
  • There hasn’t been the kind of acceleration in capital expenditure you would typically expect to see in the late stage of an economic cycle 
  • As investors become more focused on risk, they may turn more readily to those active managers who have the potential to provide a buffer in falling markets

 

View PDF »

 

Global Bonds 

BobJolly

by Bob Jolly, CFA
Head of Global Macro Strategy and Co-Portfolio Manager of the Hartford Schroders Global Strategic Bond Fund

Will 2018 be another year in bond nirvana or are the storm clouds set to upset bondholder stupor?

  • 2017 was a good year for markets
  • Late cycles, ill-timed fiscal splurges, and rising inflation are potential storm clouds hanging over 2018
  • Presently, Schroders expects that these storm clouds will fail to wash away accumulated returns from the post-crisis bull market

 

View PDF »

 

US Multi-Sector Fixed Income 

AndrewChorlton

by Andrew Chorlton
Head of US Multi-Sector Fixed Income and Co-Manager of the Hartford Schroders Tax-Aware Bond Fund

In today’s challenging market environment, Schroders believes investors will need three attributes: realism, patience, and flexibility.

  • Investors faced with an expensive bond market must consider changes to the US tax code and the impact of the US Federal Reserve unwinding quantitative easing and shrinking its balance sheet
  • Schroders believes that in this environment, your fixed-income allocation should provide principal stability and some income
  • We believe the best approach to today’s market is a cautious one

 

View PDF »

 

Emerging Market Debt

James-Barrineau

by James Barrineau
Co-Head of Emerging Markets Debt Relative and Co-Manager of the Hartford Schroders Emerging Markets Multi-Sector Bond Fund

A solid global backdrop, improving fundamentals, and relatively attractive income may drive continued (albeit more modest) gains in 2018.

  • Real interest rates are very attractive in key countries as inflation has diminished while currencies appreciated
  • Despite the solid economic and fundamental backdrop, some emerging markets face challenges that primarily stem from political factors
  • Credit quality and corporate creditworthiness are both on the the rise 

 

View PDF »

 


All investments are subject to risk, including the possible loss of principal. Fixed income risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. Foreign investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as political and economic developments in foreign countries and regions (e.g., “Brexit”). These risks are generally greater for investments in emerging marketsSmall- and mid-cap securities can have greater risk and volatility than large-cap securities. 

The views expressed herein are those of Schroders Investment Management (Schroders), are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions.  The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Schroders or Hartford Funds. 

 

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