Asset management firm Emles Advisors has released its 2021 annual outlook. “Those That Run With The Pack Will Be Left Behind” features a forward from Emles’ Chief Executive Officer, Gabriel Hammond, who explains how the market outlook for 2021 is going to require a different approach to match the challenges presented.
“Uncertainty has never been greater. This is not a philosophical musing; regardless of what the VIX is doing, the confluence of globalization, population growth, and technology will lead to more events like last year’s pandemic, not fewer of them, over the next decade (not always in the form of a zoonotic virus). That means risk and opportunity. It means Carnival Cruise Lines and Peloton. It means bigger separation between the winners and the losers. Out with the old, in with the new. Investors must look beyond the old themes and investment offerings if they are to participate in the markets, let alone outperform,” wrote Emles’ CEO, Gabriel Hammond.
Among topics covered in the guide, there’s a review of the global macroeconomic environment, which now has a new reflationary business cycle in sight. The outlook also provides a view into global equity markets. With the backdrop of fiscal stimulus, Emles believes U.S. corporate earnings will be stronger across the board, and that equity prices, while seemingly at risk of high P/E multiples, have additional room to grow. Over the long-term, the gap between developed and emerging equity markets is expected to shrink as growth in international – in particular emerging – markets pick up.
Related Article: Q&A With Emles Advisors Co-Founder Gabriel Hammond
The outlook’s dive into fixed income sectors will show the shift to an environment where credit risk premia and selectivity will be the key drivers for returns (versus duration risk). Broadly, they view credit markets to lean negative, yet select credit pockets look attractive. And while alternatives have been a growing allocation in investor portfolios over the years, Emles stresses the importance of considering newer alternative options, such as bitcoin, which may provide access to uncorrelated returns or total return potential.
With investors facing a challenging economic landscape, they are confronted with financial markets where asset class behaviors often evolve faster than understood. As past strategies may not solve today’s needs, it will be important for investors to tap into unique markets.
As noted, “More of the same may not help investors reach their goals in the years ahead. We believe this may not be the time to follow the pack.”
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