I had the benefit of good investment input in a live seminar with Invesco on Tuesday, called ‘Investment Intelligence’ and a couple of webinars from Prudential as they outline their current views for asset class returns in their ‘smoothed’ funds range and celebrate 15 years of investment in PruFund Growth.
Both Fund Managers are substantial in terms of their technical input and capability. We will take note of their input and views on the markets and consider this alongside other views, JP Morgan for example.
J P Morgan on 05/11/2019 thought that we were finely balanced, and a recession could start in the US and then spread around the world. It was a 50/50 call.
Thankfully things look like they may have moved on slightly and Invesco have said that the markets have priced in all the good news, we just need to deliver against the good news priced into markets. Invesco’s view on Monday was the recession risk is decreasing and that we have a 65% chance of not having a recession.
Invesco also stated that an economic downturn is unlikely next year although economic and political uncertainties remain elevated. However, equities are still more attractive than other investment assets.
Key issues for Invesco are as follows:
| Issue | Low Risk | Medium Risk | High Risk |
| Trade | X | ||
| Brexit | X | ||
| Bond Bubble | X | ||
| Policy Effectiveness | X | ||
| Political Risk | X |
The top Geo-Political risks according to Invesco are:
- Major cyber attack
- Rising authoritarianism
- Trade wars
Prudential have a slightly different fund management style as they manage their multi asset fund with ‘smoothing’ but they also stated that a lot of the good news is priced in to markets. Prudential also re-stated that they expect lower returns for longer. This has been a theme for quite a while now and not surprising given how low yields have been on fixed interest and cash deposits over the last decade.
Summary
As long-term investors we need to remember the following:
- Remain invested, it’s about time in the markets not timing the markets
- Be well diversified
- Think long term
- Try to ignore short term volatility, it’s just a function of markets
There is a lot going on in the world and we get bombarded with negative news flow about Brexit and UK politics but don’t be too concerned. Whatever has happened over the last c 30 years, (man and boy as an adviser – I’m only 21!), the markets have always recovered.
The investment world is far more global today too. Our key concern now when you invest globally (as most of us do) is for the US and China to do a trade deal. This would be good for all of us.
Happy Christmas and have a happy, healthy and prosperous New Year from all of us at People and Business IFA!
Steve Speed