César Pérez Ruiz shares his top 3 investment themes
Our chief investment officer, César Pérez Ruiz, examines the investment landscape for this year. According to him, we could see a mild recession in the US this year—but he believes positive nominal GDP growth could help prop up corporate revenues.
Convergence of risk premia
The convergence of risk premia should increasingly shake up the opportunity set within and between asset classes. A further decline in US equities’ risk premium over government bonds could be hard to justify in light of economic and earnings growth metrics, so non-US equities could potentially catch up this year in terms of relative performance. There may also be the possibility of convergence between US and euro area bond yields.
Revenge of 60/40
Last year, a trend toward positive correlations between bonds and equities meant that investors invested in 60/40 portfolios found little solace, with both asset classes suffering at the same time. But we expect that correlations will turn negative again, with government bonds and equities moving less in tandem.
Fixed-rate rather than floating-rate debt
In light of the fast rise in interest rates, companies carrying fixed-rate debt could fare better than ones with floating-rate debt. Similarly, countries (and their currencies) where fixed-rate mortgages are prevalent could prove more resilient than ones where variable rates are more common.