Our Thinking

As we enter the final months of 2020, we outline why we have become more inclined to buy dips in the equity markets.

The 10 themes our Asset Allocation team will be mulling over before welcoming 2021.

The more things stay the same…

A once-fringe economic theory has been embraced by liberal politicians at the same time as traditional budget hawks have been in retreat. Its rise has potentially radical implications for inflation and investors.

In this outlook, we bring together teams from across LGIM to answer the key macro and market questions for our clients over different time horizons.

As we look ahead to the next three months, and consider how to invest on behalf of our clients, we are confronted by seemingly conficting signals from depressed bond yields and exuberant equities.

Raising the retirement age can help with the fiscal costs of living longer. But our unhealthy lives could force us to look at other options.

In the next economic downturn, central banks will likely have to reach further into their unconventional playbook. But which policymakers have the most freedom to act and what does that mean for asset prices?

We remain cautious overall as risks of the US election, trade with China, unpredictable geopolitical events and Brexit continue to smoulder.

Can environmental, social and governance concerns (ESG) fit within a factor-based portfolio? In this article, we tackle two issues: the inconsistency in methodologies for ESG scoring, and ways to integrate ESG considerations into factor portfolios.

Developments in trade tensions, emerging markets and European politics may determine the trajectory of markets over the coming months.

Can cyclical tailwinds paper over the structural cracks? And what’s the outlook for global trade, China and equity investors?

While trade tensions have escalated in recent months, we believe the case for emerging markets remains compelling - if investors know where to look.

Many investors combine concerns over overcrowding in factors with capacity fears. We want to help separate these terms and provide some clarity over the current state of factors.

Companies that have seen their share price depreciate sharply in the face of self-inflicted wounds, structural challenges, or cyclical headwinds, represent potential ‘turnaround stories’. In this article we look at the attraction of investing in these businesses, and evaluate the risks or opportunities they present.

We expect another strong year for growth with the global economy firing on almost all cylinders. But the market has priced in this optimism, implying greater vulnerability for disappointment. We expect the low interest rate environment to continue into 2018. While interest rates can drift up, we do not think this is the beginning of the end for the bond markets.

The consequences of monetary tightening will define the 2018 investment landscape.

The retirement of baby boomers is having a negative impact on economic growth. This is bad news for the return on risky assets and applies downward pressure on interest rates.

Peak oil demand is a contentious topic. It is crucial for climate change, yet there are possible negative downsides such as volatile oil equity prices and corporate bond defaults.

The enthusiasm and excitement of a new technology has on many occasions captured the imagination of the supposedly hard-nosed investment community, and encouraged them to overstate its profit potential.

What is a fallen angel? In theological terms, a fallen angel is one who has rebelled and been exiled from heaven.

Investors currently buying UK government bonds are doing so in the knowledge that they are accepting a yield which is lower than the rate of inflation, i.e. the real yield.

In a surprising result, the general election has ended in a hung parliament. At the time of writing, the Conservative party has won approximately 318 seats.

Our forecast of a long-term structural shift away from coal could have dramatic implications for investors.

The logistics industry is seeing increased investment, driven by technology trends including automation and smart manufacturing.