Global Intelligence

Our 1H 2021 outlook







Pandemic priorities

The natural world has a way of intervening from time to time to remind us just who’s in charge. The COVID-19 pandemic that swept through nearly every corner of the globe in 2020—and continues to rage with devasting effect—has reshuffled priorities across the global economy.

The development and rollout of multiple vaccines in historic time increase the odds that 2021 will be a vast improvement over the year just ended, but as we highlight in this issue of Global Intelligence, we don’t foresee a return to normal. Global Chief Economist Frances Donald points to the blurring of lines between fiscal and monetary policy as one of several macro disruptors that have emerged from the pandemic and may endure well beyond its containment. Another lasting effect includes the deepening search for yield. Senior Portfolio Managers Howard Greene and Jeff Given argue that even in this era of yield scarcity, the role of core fixed income hasn’t changed. And while commercial real estate has been as profoundly affected by the pandemic as any asset class, our Global Head of Real Estate Investments Michael McNamara points to years of flexibility in real estate use as evidence of its resiliency and cause for optimism in the year ahead.

Another tectonic shift in priorities has been the global focus on sustainability. Portfolio Manager Patrick Blais and our Canada Head of ESG Margaret Childe see the 2016 Paris Agreement on Climate Change as a potential blueprint for investors. Asia Fixed Income CIO Endre Pedersen, Portfolio Manager Murray Collis, and our Asia Head of ESG Eric Nietsch describe how investors can unlock sustainable opportunities in Asia fixed income—an area in which sustainability is evolving faster than many investors may realize.

We hope you enjoy this edition of Global Intelligence, and we welcome your feedback.

Christopher P. Conkey

Global Head of Public Markets

Stephen J. Blewitt

Global Head of Private Markets

Asset allocator's view

Chart of the asset allocation team’s six to 12 month allocation view as of January 11, 2021. Moderately overweight on global emerging markets equities, European equities, Chinese equities, emerging-market debt, and U.S. high-yield debt; neutral on Japanese equities and Canadian equities; and moderately underweight on U.S. equities, U.S. government bonds, European government bonds, Japanese government bonds, and Canadian government bonds.

Macro disruptors: hidden themes that could reshape the world economy

When a majority of economists agree and the range of consensus forecast narrows, it could be time to expect the unexpected. Our Global Chief Economist Frances Donald identifies evolving macro themes that investors should pay attention to.

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Unlocking sustainable investing opportunities in Asian fixed income

Private capital is widely expected to play an important role in Asia’s journey toward a sustainable future. We assess the emerging opportunity set from a fixed-income perspective and identify key considerations that could influence investment outcomes.

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Envisioning the possibilities: the future of real estate resides in flexibility 

Real estate developers with a flexible mindset are unlocking embedded options within existing assets to generate new sources of alpha. See the opportunities being uncovered.

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Using the Paris Agreement on climate change as a long-term investment framework

Investors have a vital part to play in ensuring corporations help meet the required reductions in carbon emissions set out by the Paris Agreement and, in doing so, can also enhance returns.

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The case for core: fixed-income investing in an era of yield scarcity

The most surprising aspect of the bond markets over the past year wasn’t how badly things fell apart—it was how quickly they recovered. We take a closer look at the role core and core-plus strategies can play in an era when the “easy money” has already been made.

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A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange-trading suspensions and closures, and affect portfolio performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future, could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other pre-existing political, social and economic risks. Any such impact could adversely affect the portfolio’s performance, resulting in losses to your investment

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