Investors should focus on fundamentals in 2018
The outlook for investment markets in 2018 remains positive but investors should remain on full alert and focus on the fundamentals, according to Legg Mason.
The firm’s “Outlook 2018 report” stressed that the expansion has yet to provoke a major uptick in inflation which was expected to average 1.7 per cent in advanced economies before converging on two per cent over the medium term, as according to the International Monetary Fund.
Legg Mason’s head in Australia, Andy Sowerby said that although 2018 would see a rather positive investment environment, the investors should not adapt the ‘rising tide’ philosophy.
“On the contrary, given current valuations gains, this year could well require the kind of selective approach to sectors and securities that is practiced by active managers,” he said.
“The report states that economic conditions appear positive in nearly all regions – the first time that global growth has been this synchronised since 2011, with no major economies mired in recession.
“The benign scenario reflects in part the finesse major central banks have shown in gauging the pace of recovery and effectively communicating their planned monetary policy changes to financial markets.”
Other key take-outs from the report were a move from a low-growth, low-inflation environment to the so-called “Goldilocks” scenario of higher growth and low inflation, positive developments in China following its attempts to tame the country’s bond market and its increased integration with the global financial system.
AUTHOR
Oksana Patron
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
