Volatility to present opportunities, T. Rowe Price says
High valuations across most global asset classes and a range of economic and policy risks, including the threat of trade protectionism, could see volatility persist moving into the second half of 2018, according to T. Rowe Price’s Mid-Year 2018 Market Outlook.
However, this would potentially produce attractive buying opportunities for long-term investors, the global investment manager said.
T. Rowe Price said the growth outlook is most robust in the US, where confidence remains high on the heels of last year’s tax cut legislation for individuals and corporations.
The outlook for European economies also is broadly positive except in the UK, where Brexit uncertainties continue to weigh on business confidence and business spending, the manager said.
Rob Sharps, head of investments and group chief investment officer at T. Rowe Price, said the key question going forward will be whether the global economic expansion and the bull market in risk assets have entered a late stage, a phase typically marked by inflationary pressures, rising interest rates and deteriorating profit margins.
“Some signs point in that direction, but it would be a mistake to assume that because the current expansion has been long, it must be nearing its end. The recovery has been long, but it has also been slow,” Sharps said.
“It may be that markets are in a mid-cycle pause as central banks around the world recalibrate monetary policy for a more sustainable expansion.”
Sharps said the fundamental environment is “great, but it’s not getting any better”.
“Risks are rising, and investors should consider positioning their portfolios a little more conservatively at the margin, but not overdo it,” he said.
“We’re not necessarily at the end of a bull cycle, but if you take a multi-year view, you should probably expect lower returns going forward than what we’ve experienced over the last couple of years.”
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
