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Signia's Robert Lee, Co-Head of Multi-Asset Investments, joined a panel of experts to discuss the outlook for investors in 2021

Robert Lee

Published 5/01/2021

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Signia's Robert Lee, Co-Head of Multi-Asset Investments, joined a panel of experts to discuss the outlook for investors in 2021

Signia's Robert Lee, Co-Head of Multi-Asset Investments, joined a panel of experts to discuss the outlook for investors in 2021.  

The first part of the discussion focused on which risks might carry over into 2021, whether the big wave of optimism generated by the Covid-19 vaccine rollout is entirely justified, and is set to continue. 

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Panellists then discussed why equities will continue to outperform in 2021 and whether the recent comeback of value investing might be short lived.

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Finally, the panel turned to focus on the incredible recovery China went through in 2020, and also if the growing ESG investment theme can be sustained in forthcoming years and this decade

Watch in full >> here 

Investors have increasingly turned to fixed income as they try and make sense of 2020.  Robert suggests the pandemic had tempted risk averse investors from the ‘cash and equivalents world’ to make the change. 

‘Since the financial crisis, liquidity funds have seen very low nominal yields and now, after the pandemic, are yielding next to nothing at best or negative in most cases,’ he says. ‘On sterling and dollar denominated liquidity funds, you’ll be lucky to get a handful of basis points above zero in terms of yield. So, those investors entering the market are looking to take some duration risk in the high-quality segments of fixed income in sovereigns and supranational bonds.’

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The November market rotation into those stocks that struggled the most during the beginning of the crisis has given value investors a glimmer of hope their investment style could finally come back into favour. But, despite the move to sectors such as energy and financials based on the news of the Covid-19 vaccine, investors remain cautious of the new developments. Still, they believe equities will be the asset class to favour in 2021.

Robert thinks the November market rotation will continue in the short term, but he is not convinced this change means value will start outperforming growth investing for good. ‘We’ll continue to see this November style rotation into cyclicals and value stocks in fits and starts this year, but without a significant pickup in bond yields or steepening of yield curves, which need an inflation driver behind them, it’s very hard to see a sustained rally in those sectors and styles persisting longer term,’ he said.

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Finally, panellists address the question 'Is being ‘all-in’ the right move upon entering 2021?'

Robert is positive on equity markets in 2021 but is mindful of the valuation levels, noting that much of what was expected for next year for equity valuations has been anticipated to the end of 2020. Specifically, he notes the greed-filled levels in November of the Stoxx Europe 600 and the Russell 2000 index, respectively up 14% and up 18%, which were at the highest on record in their history.

 ‘We are still expecting a good, solid global economic vaccine-led recovery in 2021. Looking at consensus projections, world GDP is expected to contract by 4% in 2020 and expand by over 5% in 2021,’ Lee says.

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