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2019 Outlooks (Schroders)

1st Quarter 2019

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


Global Economic Outlook

by Keith Wade, Chief Economist and Strategist for Schroders

We forecast global growth to slow in 2019, the dollar to weaken, and US interest rates to peak mid-year.

  • We forecast a more stagflationary environment in 2019 with global growth set to slow and inflation to rise. 
  • We expect US interest rates to peak at 3% in mid-2019 but other central banks will continue to tighten monetary policy.
  • The US dollar looks set to weaken, which could benefit emerging market assets.

 

View PDF »

 

Global Equities Outlook

AlexTedder
SimonWebber

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

Seek out companies investing for change in 2019, but be increasingly wary of those that have borrowed excessively.

  • In general, markets are moving into a new phase in which inflation is on the rise and central banks are offering less support to markets.
  • There is plenty of complacency in equity markets about the risks from higher interest rates and elevated corporate debt.
  • We believe that some of the best investment opportunities are to be found where industry disruption is significant, such as in the transition to renewable energy.

 

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Emerging Markets Equity Outlook

TomWilson

by Tom Wilson, Head of Emerging Market Equities for Schroders

Key potential catalysts for emerging markets performance in 2019 are US dollar weakness, a better-than-expected outcome in US-China trade relations, and an easing in Chinese growth concerns.

  • Valuations in aggregate are attractive and reflect a cautious growth and earnings outlook, while many currencies look cheap.
  • Further escalation in the US-China trade conflict is a risk, but is increasingly priced-in.
  • Schroders expects moderate US dollar depreciation in 2019, which should act as a catalyst for emerging markets equities.

 

View PDF »

 

Emerging Markets Multi-Sector Debt Outlook

James-Barrineau

by James Barrineau, Head of Emerging Markets Multi-Sector Debt

Emerging markets debt yields are at levels that may rival reasonable forward expectations for equities in 2019. In our view, a true catalyst for additional price gains will likely be a lower US dollar.

  • Emerging markets debt absolute yields are at levels that may rival reasonable forward expectations for equity returns.
  • A true catalyst for additional price gains will likely be a lower US dollar, either from slowing US economic growth that converges with the sluggish eurozone, or more clarity on the end of the Fed hiking cycle.
  • The most stressed countries in EM have made large strides towards fundamental stability. Although growth will be slower, it is unlikely that macroeconomic imbalances threaten a recovery in asset prices.

 

View PDF »

 


Investing involves risk, including the possible loss of principal. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. • Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political and economic developments. These risks may be greater for investments in emerging markets. 

 

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. 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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