Autumn investment update: a balancing act
We look at the potential challenges and opportunities for investors in the final months of 2020.
Given the rapid recovery in global stock markets from their March lows and the acceleration of long-term investment themes, such as the shift to greater technology use through online shopping and remote working, it would seem that not much has changed over the past few months.
Looking ahead to 2021, this gives us both cause for optimism and caution.
For now, we have a clearer sense of how the pandemic has affected the global economy overall. Our economics team believes that while growth will continue, it will be slower over the next six months than previously thought, given the rise in new infections and the emergence of local lockdowns. That said, a pick-up in economic activity, the team believes, will occur as vaccines become more readily available next year.
An unsettled picture
Despite this, the picture remains unsettling. New cases of the virus are still in the hundreds of thousands worldwide, the incidences of mini-lockdowns are on the rise and despite progress being made on many fronts, a vaccine is still not a done deal.
Given these uncertainties, we believe the rise in global stock markets from their low point in March means that the potential for further increases is likely to be limited, at least in the near term. Many investors are already thinking about potential obstacles ahead – the US elections in November, US-China tensions and the ongoing Brexit saga.
From risks, come opportunities
So, while there are still roadblocks ahead as we continue our journey into 2021, strangely perhaps, some of the risks we face are, in fact, creating opportunities. Nowhere is this more evident than in the area of responsible investing. Responsible investing is a broad-brush term which, at its very core, centres on environment, social and governance (ESG) factors. ESG factors assess how well companies are prepared for global challenges such as climate change or how they’re treating their employees or suppliers. To learn more about ESG-related investing, watch our short video here.
Indeed, according to Sonja Laud, our Chief Investment Officer: “The multiple challenges besetting the world – from the pandemic, to climate change, to ingrained racism – have prompted ever more investors to agree that doing nothing about these issues is simply not an option.”
For us as an asset management house, these challenges have only strengthened our resolve to take further decisive action to deliver positive change. This we are doing through our role as investment managers of your money and the investment decisions we are making on your behalf. We look forward to sharing our thoughts with you in more detail in the months ahead.
Remember, the value of any investment is not guaranteed. The value of investments and any income received from can go down as well as up and you may not get back as much as you had originally invested.