Fourth Quarter 2021
Long term growth, short term risks
The one year outlook remains attractive for growth assets. While we expect uncertainties over the coming quarter to increase, we would view any ensuing market volatility to be buying opportunities.
The medium and long term global economic outlook remains healthy and ahead of expectations. We expect several more years in this expansionary phase with global GDP growth set to remain above trend in 2021 and 2022. Interest rate hikes are expected to still be a year away.
However, we note that growth momentum appears to be slowing. Meanwhile central bank policy is starting to taper, and the Delta variant is clouding countries’ reopening plans. Over in China, regulatory clampdowns are starting to impact growth trends.
As such, we are short-term neutral but long-term positive in our positioning. We have reduced equities and high yield credits to neutral. Our overweight cash position allows us to save for opportunities resulting from any potential near term volatility. We stay neutral on fixed income and commodities and are overweight in alternatives.
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