J.P. MORGAN ASSET MANAGEMENT -Investment Outlook 2021: Bridge over troubled waters

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In Brief

• Government and central bank support appears to have carried economies through the worst of the Covid-19 crisis, and the vaccine provides hope that an end is in sight which should give policymakers the confidence to do more in the coming months.
• The extraordinary debt burden for companies and governments coming out of the pandemic is likely to result in an extended period of low interest rates and continued central bank asset purchases.
• In any rotation from winners to losers in markets, it will be important to discriminate between cyclical and secular headwinds and tailwinds.
• After a decade of US market dominance, it could be Asia’s turn to shine. Not only has the region been more successful in containing the pandemic, but structural growth prospects are also in its favour.
• Momentum to tackle climate change looks set to increase in the year ahead. Governments are likely to use regulatory levers to put the onus on private capital.
• Extremely low government bond yields mean it’s time to rethink the 60:40 approach to portfolio construction. Credit, real estate, infrastructure and macro funds could help provide income and diversification.
• Our central case for 2021 is a vaccine rollout in the first half of the year, followed by a robust recovery in the second half. However, there are risks to both sides of this scenario and investors should be particularly vigilant of the risk of a return of inflation.

Key Themes

The six issues likely to have the most impact on global investments in 2021. 

• The deluge means lower interest rates for even longer
• The Covid winners/losers
• Asia's decade
• Global momentum towards tackling climate change
• Rethinking the 60:40 portfolio
• Central projections and risks

Important Information:

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

Please note that these are the views of J.P. Morgan Asset Management Strategists and should not be interpreted as the views of RL360.