In some ways it feels as if little has changed in markets over the last year. While some of the optimism that fuelled the almost inexorable rise of equity markets throughout 2017 may have dissipated somewhat in the current volatility, we believe a range of structural headwinds may continue to impede global growth.
With many asset classes remaining at historically elevated valuations, albeit not at the levels they began the year with, our main article analyses the current backdrop to determine how these potential headwinds might manifest themselves in 2018. Global strategist Brendan Mulhern also reveals why he has continuing concerns over China, an economy that has become a crucial cog in the global growth engine.
Brendan looks at how human behaviour seeks ways to rationalise extraordinary events (in this case, the stratospheric recent run of markets), but often fails to view them within an historical context. The phrase ‘rational exuberance’ entered the investment lexicon in 2017, and it served as a handy rebuttal to those suggesting that the recent surge in market optimism was akin to the ‘irrational exuberance’ that Robert Shiller first identified months ahead of the technology bust at the turn of the millennium. With markets currently displaying some of the same traits noticeable ahead of the bursting of that particular bubble, Brendan places a number of other asset bubbles and their respective aftermaths within a historical context.
We also have a bond and currencies outlook for 2018 from Newton’s fixed income leader Paul Brain, while Nick Clay, lead manager of the Newton Global Income Fund, delivers his perspective on the year ahead from an equities standpoint.
Our second main feature puts our chief executive Hanneke Smits in the spotlight. At our annual investment conference on 30 November 2017, Hanneke was interviewed by BBC journalist Emily Maitlis and asked to take stock of her first full year at Newton’s helm. Hanneke answers a range of questions, from what her business priorities were over those first 12 months, to how Newton is evolving its investment range to meet clients’ changing requirements, to the influence of family upon her career to date.
Finally, we provide a selection of recent posts from our popular investment blog ‘Fly on the Wall’, on a variety of subjects including China’s new ‘silk road’, trends in environmental, social and governance (ESG) investing, blockchain and defined contribution pensions.
We hope you enjoy this edition of inPerspective.
You can also download the individual articles within this edition of inPerspective:
Sustainable fund launch
Details of the first launch within our sustainable fund range.
Global strategist Brendan Mulhern explains why he believes investors should remain wary in 2018.
View from the top
CEO Hanneke Smits takes stock of her first full year at Newton’s helm.