5 Market Trends to Watch in the New Year

By Salvatore Bruno via Iris.xyz

The equity market is poised to deliver a record setting year. For advisors, that likely dictates a shift in strategy as you move into 2018. Whether you are planning shorter-term portfolios for clients who are near or in retirement, or longer-term portfolios for clients who are still accumulating assets, now is the time to focus not only on what’s happening in the markets overall, and identify way to help support better, more predictable outcomes for your clients.

Here are 5 market trends to watch—and how each one may impact your approach in 2018:

1. International equities may be the sweet spot for stronger returns.

International equities are certainly becoming more attractive to investors as the outlook for a potentially over-valued US equities market weakens. That said, with an expected growth rate of near 2%, the US has the potential to continue to perform well, but it is likely to lag other regions with higher forecasted growth. Considering the lower valuations, higher dividend yields, and more accommodative monetary policies for non-US equities, now may be the time to look beyond the US equity markets. However, caution is key. Foreign currencies continue to be difficult to predict, and the expectation of a strong dollar trend in 2017 didn’t deliver.

The takeaway: If you opt to allocate assets in non-US markets, consider the possible currency impact for your portfolios, and take steps to hedge some of this currency risk. 

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