The past year has provided us with a valuable lesson about why it’s important for investors to remain calm when the going gets tough – and that patience rewards those who stay focused on their long-term plans. The experience reminds me of the journeys my father used to take when he was racing rally cars. He needed to adjust his speed to the twists and turns in the road by shifting up and down through the gears, with a reliable co-driver by his side to help navigate the course.

Although the path ahead is likely to be bumpy, we’re confident about the investment environment. We’ve positioned portfolios so they’re exposed to asset classes that tend to perform well during the early phases of an economic cycle. There’s always the risk of a setback. Notably, the logistics involved in manufacturing and distributing vaccines on a mass scale are complicated. So portfolios also include diversifying assets that can help to smooth the ride.

When you’re in the middle of a crisis, it can be difficult to think beyond the immediate situation. Yet, with Covid-19 vaccines on their way, we are looking forward with more optimism. Although lockdown restrictions are likely to remain in place over the winter, there are encouraging signs. We believe that with ongoing support from governments the global economy will quickly bounce back during 2021 and investors should benefit.

Stock markets have proved remarkably resilient – particularly in the US where leading technology firms have driven them to new highs. The US election result has added to the sense of optimism that 2021 will be an easier year for companies across all industry sectors.

For an overview of the global economy and financials markets in 2020, watch the clip below.

5

Call

A greener future

• Dedicated assets
• Low-carbon equities
• Green bonds

Positive outlook

Sustainability is likely to be at the heart of structural change

We’re also encouraged that the challenges of 2020 have given us a fresh perspective on what’s important. The pandemic has put many social and environment issues in the spotlight, and highlighted what can happen when countries cooperate. In the spirit of overcoming adversity, Quintet has become the Principal Partner of the West-Eastern Divan Orchestra.

Bill Street
Group Chief Investment Officer

I hope you find our Counterpoint 2021 interesting look forward to continuing the conversation with you over the months ahead.

Positive outlook

1

Call

Spring is coming

• High quality bonds
• USD exchange rate

• Equity
• Smaller/cyclical/
  value stocks
• Higher-risk credit

Negative outlook

It’s not too early to invest in the early phase of the cycle

2

Call

The eternal zero

• Private equity/credit
• Alternatives
• Select property & infrastructure
• Tech and growth stocks as long-duration assets over extended horizons
• More cyclical tech subsectors at shorter horizons

Positive outlook

Central banks are likely to keep real rates at rock bottom

3

Call

Big government

• Higher yielding and more distressed credit
• EUR exchange rate

Positive outlook

Coordinated fiscal and monetary policy is likely to play an even greater role

4

Call

A multipolar world

• Emerging markets equity
• Emerging markets debt

Positive outlook

Major economies should become more self-reliant