John Walbaum looks ahead at the main themes for 2018
Our predictions for Investment for 2018
21 Dec 2017 - Estimated reading time: 3 mins
Our prediction of the main themes in 2018?
There are some pretty good signs of a period of sustainable global growth, albeit modest. That said, most markets are expensive with little looking cheap or a compelling buy; the industry has been cautious for quite some time and today’s uncertainties mean that caution is not going away at present. Brexit and the impact on the UK economy will remain one of the big issues in 2018, particularly the impact on the future path of interest rates and inflation. However, it is important to remember that markets and opportunities for investment are global, and to not just look through a somewhat more gloomy UK lens.
What will be the biggest challenges?
The challenge of finding the right, attractive assets to invest in when much looks fully valued, if not expensive, is considerable. It’s important our clients are hedging their liability risks in case of policy mistakes or general setbacks to growth that lead to lower rates for longer. It has become a growing struggle to advise clients when rates are so low and they fear buying at the bottom although this is a problem schemes have been facing for at least 15 years. In Defined Contribution we will continue needing to see far more cash being invested to give future generations working in the UK the chance of a decent retirement.
How do we rise to these challenges?
By continuing to provide clear and consistent messaging and by making sure those views are reflected in what our consultants are saying to their clients, whilst tailoring for specific circumstances. In an environment of challenging markets, and greater competition, it’s important our research continues to be dynamic in terms of identifying both strategic and tactical opportunities, which can help our clients to generate returns. In Defined Contribution we need to get outcomes based solutions into as many places as possible, and we need to see action on the back of that, in terms of more cash being invested and sensible retirement dates being set.
What’s on our wish list for the year ahead?
We’d like to see some positive news on UK economic growth and more clarity on the Brexit settlement that will hopefully lead to a positive outcome for both the UK and Europe. A mellowing of the rhetoric surrounding the US and North Korea, allowing the region to become less of a risk to global security and for Environmental and Social Governance (ESG) issues to become a genuine focus for investment rather than something that’s paid lip service to.
Our own New Year resolutions
To continue driving efficiencies into all aspects of the services we deliver to clients with an ever increasing focus on better outcomes and risk management.
To read our other predictions for 2018 see our related content tab below