Our Thinking

We are marginally more cautious as the Chinese economy becomes unsettled and supply-chain issues persist, but retain our belief that we are in the middle of the cycle, not approaching the end.

Global temperatures are currently on a trajectory to increase by nearly 4°C above pre-industrial levels, which would be truly catastrophic, unless action is taken.

We continue to favour staying long equities, and are prepared to increase our exposure in a dip, as investors bask in the sunshine of a global economy in mid-cycle.

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

The more things stay the same…

Q3 Outlook: Taking stock

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.

Nervy investors are eyeing top-heavy market-cap indices with suspicion. But how can they use factors to navigate the trade-off between diversification and concentration risk?

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?

What determines a city’s future success and how is this linked to property investment?

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.

Whether you’re looking at equities, bond yields, currencies or economic strength, it’s the US that’s been leading the charge. Is this likely to continue?

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.

Is artificial intelligence overhyped, or are we at the vanguard of a new wave of corporate productivity improvements ushered in by next-generation technology?

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.

A lack of policy space means that central banks may have to turn to more unconventional responses when the next recession occurs.

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.

The world is changing and how it looks in five years’ time will be very different to today. A long-term perspective is the key to success.

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.

Global credit markets have shown remarkable resilience over the past year.

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