How to position a portfolio for resilience through a long bull market, slowing global growth, presidential election year
NEW YORK–(BUSINESS WIRE)–Wells Fargo Investment Institute (WFII) today released its “2020 Outlook: A Call for Resilience,” which provides an in-depth analysis of economic and market forecasts, including commentary about the global economy, equities, fixed income, real assets, alternative investments and portfolio implementation actions.
“While this year was largely characterized by a tug-of-war between substantial geopolitical drags and offsetting global monetary policy easing, ironically all equity asset classes, and even several fixed income asset classes, have delivered double-digit returns, despite these concerns,” said Darrell Cronk, president of WFII and chief investment officer of Wells Fargo Wealth & Investment Management. “For now, we remain comfortable that the expansion can again weather this storm, even while traditional late-cycle signals abound.”
The report suggests three factors that are necessary for the global economy to stay resilient:
- Consumer spending must remain solid.
- Credit spreads (fixed income) must remain well-behaved.
- China-U.S. trade dispute needs to de-escalate.
“Investors can instill resilience in their portfolios during this tricky part of the economic cycle by wisely positioning exposure to risk assets,” Cronk said. “Strong performance across equities, fixed income and real assets affords investors a unique and timely opportunity to ensure that position and exposure reflect the right risk/reward.”
The outlook provides five ways investors can pivot away from higher-risk asset classes:
- Cash has an important place in a portfolio.
- Focus on quality.
- Go beyond traditional fixed income for yield.
- Defense can be a good offense.
- Focus on longer-term diversification, as shorter periods are likely to be volatile.
In addition, WFII’s focus themes for 2020 are Environmental, Social and Governance (ESG) Investing and a recurring series guide to the 2020 Elections.
Join the WFII 2020 Outlook webcast and conference call on Tuesday, Dec. 10, at 4 p.m. Eastern time. The number is 855-458-0619.
About the Wells Fargo Investment Institute
Wells Fargo Investment Institute is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, providing investment research, strategy, manager research and thought leadership within the Wealth and Investment Management division, with the goal of supplying world-class advice to the company’s financial and wealth advisers.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,500 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 261,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2019 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.
All investing involves risks including the possible loss of principal.
Diversification cannot eliminate the risk of fluctuating prices and uncertain returns.
Stocks may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Bonds are subject to interest rate, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. Real assets are subject to the risks associated with real estate, commodities and other investments and may not be suitable for all investors.
Alternative investments carry specific investor qualifications which can include high income and net-worth requirements as well as relatively high investment minimums. They are complex investment vehicles which generally have high costs and substantial risks. The high expenses often associated with these investments must be offset by trading profits and other income. They tend to be more volatile than other types of investments and present an increased risk of investment loss. There may also be a lack of transparency as to the underlying assets. Other risks may apply as well, depending on the specific investment product.
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Wells Fargo Investment Institute, Inc. (WFII) is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.
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