a clearer path for growth
Diversification and selectivity will become ever more important in 2020 and beyond, especially as we think yields will remain low, returns will be tough to come by and volatility may rise. That means getting more exposure to more opportunities and more risks across asset classes, while remaining nimble.
Nuveen’s investment theme for this year is 20/20 vision: A clearer path for growth. The “clearer path” part is pretty straightforward: Our investment leaders think the macro fears that dominated most of 2019 have receded.
Monetary policy is easier than it was a year ago, and global recession risks seem to have faded too. Trade policy remains a source of concern but hasn’t been causing the sorts of market selloffs it did in late 2018 and earlier in 2019. And while other geopolitical events such as the 2020 U.S. elections, rising tensions in the Middle East and Brexit negotiations likely will spark fresh bouts of volatility, we think what has been the longest postwar economic expansion in history still has legs.
But it’s that “20/20 vision” part of our theme that we think may be more important. Because 2020 looks to be a year where investors will need keen vision to closely scrutinize markets to find the fewer investment opportunities that exist the longer the bull runs.
While we continue to find good investment opportunities across asset classes, we are also increasingly concerned about fuller valuations, whether the asset in question is a stock or a real estate asset. And although we’re calling for continued global growth, we recognize that the world is in the later stages of the current economic and credit cycle.
So, putting our 2020 theme in context, picture a year in which the economy’s path seems clearer but markets … not so much. That’s a notable shift from what investors have come to expect over the past decade when we enjoyed strong financial returns while worrying about economic growth. The bottom line: Be prepared to tamp down your return expectations.
What should institutional investors do? Our asset class insights and investment ideas offer these investors different options to diversify portfolios in these low-yielding and return-challenged markets.
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