César Pérez Ruiz, Head of Investments & CIO, Pictet Wealth Management
After a year marked by economic contraction, 2021 stands to be the ‘year of the phoenix’, with a strong rebound in global GDP and corporate earnings in 2021 thanks to the unrolling of vaccines and substantial policy support. Anything connected to the ‘green’ economy will benefit greatly from recovery programmes. Within a generalised recovery, country selection will become important again. Macro hedge funds should do well in this environment. With the US dollar set to fall, emerging-market assets should also perform. We also see 2021 as a year for corporate bond pickers who avoid the extremes between the top and bottom of the ratings scales. But a big rise in indebtedness means ‘who pays the bill’ will be a question investors increasingly ask – with negative implications for government bonds.
It will also be worth focusing on the revival of asset classes hit especially hard by the pandemic (what we call ‘loser’s revenge’) – emerging-market equities, small caps and commodities. The global recovery should enable cyclical companies close the performance gap (although persistently low bond yields should continue to help growth stocks too). We also see M&A picking up again, including M&A in mature industries. Increased corporate activity in general will set the stage for event-driven hedge funds to perform.
Finally, we believe that some of the investment themes mapped out a year ago have gained extra relevance because of the events of the past year. These include active management, the attraction of real assets, ESG investing and treating volatility as an asset class in its own right.
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