Late-cycle investment opportunities entail balancing risk and reward
As the economic expansion and the second-longest bull market continue to
evolve, Wells
Fargo Investment Institute (WFII) today released the 2018 Outlook
report ‘Moving
Ahead in an Aging Recovery.’ The report notes that the global
expansion is maturing but isn’t over yet, and that investors should be
more selective in asset selection and incorporate active management
strategies into portfolios.
“Investors should stay anchored in their goals, as investment return
trends typically ebb and flow over an economic expansion,” said Darrell
Cronk, President of Wells Fargo Investment Institute and Chief
Investment Officer of Wells Fargo Wealth and Investment Management.
“While investment return is a priority for investors, we are at a point
in the cycle when it’s particularly important to seek ways to reduce
unnecessary portfolio risks, which is best accomplished through a
diverse portfolio. We believe the primary portfolio challenge for 2018
will be to assess risk and reward more diligently as investors look for
late-cycle opportunities.”
Investors are invited to learn more about WFII’s 2018 Outlook by joining Paul
Christopher, Head of Global Market Strategy for WFII, and other
strategists for a conference call on December 7, 2017, at 4:00 p.m. ET.
Participants should dial 1-855-723-6393 and enter conference ID 7574039.
Investors can also download the 2018
Outlook: ‘Moving Ahead in an Aging Recovery’ for an in-depth
analysis of the 2018 economic and market forecasts, with emphasis on the
global economy, equities, fixed income, real assets, alternative
investments, portfolio implementation actions, and focus themes.
The report outlines five actions that may make a difference for
investors’ portfolios:
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Stress-test strategies against historical events.
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Seek alpha (excess return over the benchmark) through active
strategies.
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Stay flexible when assets are mispriced.
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Hold an appropriate level of cash alternatives.
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Keep your eyes on the goal.
The 2018 report also introduces and details four focus themes for
investors:
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Balancing risk and reward: Examines risks investors are facing
at this stage of the economic cycle, how emotions influence behavior
during market fluctuations, and how diversification can help mitigate
risks.
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Investing late in a bull market: Looks at how close we think we
are to the end of this equity bull market, how asset classes perform
late in the cycle, and how performance shifts when an equity bear
market occurs.
-
Tomorrow’s technology: Addresses how technology influences
businesses and economic sectors, the impact robotics and automation
will have on the labor force and productivity; and the role
cybersecurity plays in the adoption of innovative technologies.
-
The new approach to retirement: Answers how baby boomers are
approaching retirement differently than past generations, how the next
generation is planning for retirement, and steps investors should take
to prepare for their own retirement.
View the digital presentation of the 2018
Outlook: ‘Moving Ahead in an Aging Recovery.’
Watch a video
with WFII strategists on what the biggest investment story of 2017 was,
and what investors should keep an eye on and what would be a big
surprise in 2018.
About Wells Fargo Investment Institute
Wells
Fargo Investment Institute (WFII) is a registered investment adviser
and wholly-owned subsidiary of Wells Fargo & Company, providing
investment research, strategy, manager research and thought leadership
within the Wealth and Investment Management (WIM) division, with the
goal of supplying world class advice to the company’s financial and
wealth advisers. WFII provides investment advice to Wells Fargo Bank,
N.A., Wells Fargo Advisors and other Wells Fargo affiliates.
WIM is one of the largest wealth managers in the U.S., with $1.9
trillion in client assets. WIM includes Wells Fargo Private Bank,
serving high-net-worth individuals and families; Wells Fargo Advisors,
the third-largest brokerage firm in the U.S.; Wells Fargo Retirement,
which manages $330 billion in employer-sponsored retirement plan assets
for 3.9 million Americans; and Abbot Downing, serving
ultra-high-net-worth individuals and families. Wells Fargo Advisors is
the trade name used by two separate registered broker-dealers: Wells
Fargo Advisors, LLC, and Wells Fargo Advisors Financial Network, LLC,
Members SIPC, non-bank affiliates of Wells Fargo & Company.
About Wells Fargo & Company (Twitter @WellsFargo)
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, insurance, investments, mortgage, and
consumer and commercial finance through more than 8,400 locations,
13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 42 countries and territories to support customers who conduct
business in the global economy. With approximately 268,000 team members,
Wells Fargo serves one in three households in the United States. Wells
Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of
America’s largest corporations. News, insights and perspectives from
Wells Fargo are also available at Wells
Fargo Stories.
Risk Factors
Stock markets, especially foreign markets, are volatile. Stock values
may fluctuate in response to general economic and market conditions, the
prospects of individual companies, and industry sectors. Bonds are
subject to market, interest rate, price, credit/default, liquidity,
inflation and other risks. Prices tend to be inversely affected by
changes in interest rates. The commodities markets are considered
speculative, carry substantial risks, and have experienced periods of
extreme volatility. Investing in a volatile and uncertain commodities
market may cause a portfolio to rapidly increase or decrease in value
which may result in greater share price volatility. Real estate has
special risks including the possible illiquidity of underlying
properties, credit risk, interest rate fluctuations and the impact of
varied economic conditions.
Alternative investments carry specific investor qualifications which can
include high income and net-worth requirements as well as relatively
high investment minimums. They are complex investment vehicles which
generally have high costs and substantial risks. The high expenses often
associated with these investments must be offset by trading profits and
other income. They tend to be more volatile than other types of
investments and present an increased risk of investment loss. There may
also be a lack of transparency as to the underlying assets. Other risks
may apply as well, depending on the specific investment product.
General Disclosures
Wells Fargo Investment Institute, Inc. is a registered investment
adviser and wholly-owned subsidiary of Wells Fargo & Company.
The information was prepared by WFII. Opinions represent WFII’s opinion
as of the date of this report and are for general information purposes
only and are not intended to predict or guarantee the future performance
of any individual security, market sector or the markets generally. WFII
does not undertake to advise you of any change in its opinions or the
information contained in this report. Wells Fargo & Company affiliates
may issue reports or have opinions that are inconsistent with, and reach
different conclusions from, this report.
The information contained herein constitutes general information and is
not directed to, designed for, or individually tailored to, any
particular investor or potential investor. This report is not intended
to be a client-specific suitability analysis or recommendation, an offer
to participate in any investment, or a recommendation to buy, hold or
sell securities. Do not use this report as the sole basis for investment
decisions. Do not select an asset class or investment product based on
performance alone. Consider all relevant information, including your
existing portfolio, investment objectives, risk tolerance, liquidity
needs and investment time horizon.
