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IT’S HARD TO BELIEVE WE ARE ALREADY INTO THE FOURTH QUARTER OF 2021. Planning for the next fiscal year has begun in earnest, with insurers across the globe considering the optimal positioning of their investment portfolios heading into yet another year end of heightened uncertainty that could spill over into 2022. As always, we believe that a laser-like focus on fundamentals, while leaving “no stone unturned” in the search for opportunities, should serve as the proverbial guiding light for insurers and other asset allocators.
The path of the COVID-19 pandemic, ongoing for a year and a half now as of this writing, remains key to the global economic outlook, and what we’ve learned about it since last quarter isn’t particularly promising: Additional variants of the virus are possible (and potentially more transmissible and virulent), vaccine-induced “protection” from it could wane over time, and a significant percentage of the global population remains unvaccinated.
This sobering new reality is reflected in reduced economic activity, the resurgence of growth stocks over their value counterparts, and a return to record lows for long-maturity yields in recent months (see Figure 1 in PDF available below). On a more positive note, global growth is still relatively strong overall, most economies are unlikely to go back into “lockdown” mode, and monetary and fiscal stimuli remain largely supportive. All of this leaves markets caught between two hard-to-reconcile narratives: The pace of economic growth seems poised to slow, but the level of growth is likely to remain above par for the foreseeable future.
Against this somewhat conflicted backdrop, we continue to maintain a pro-risk investment stance, generally favoring equities over high-yield credit for insurers’ surplus investments in the public markets. But relative to last quarter, our optimism is tempered to some degree by a subtle downgrade to our macro and policy outlook — including the potential for…
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2023 Mid-year Investment Strategy Outlook
To help think through the asset allocation outlook and implications for 2023, we offer views from iStrat, our investment strategy and solutions group
Today’s sweet spot for yield, the growing role of alts
Insurance Multi-Asset Strategist Tim Antonelli provides his latest multi-asset views for insurers, with an emphasis on the value of core fixed income in today's environment.
Putting the global economy to the test
With economic and market fault lines emerging as a result of higher interest rates, members of our Investment Strategy team reassess the investment landscape and offer their views on equities, fixed income, and commodities.
Multi-Asset Outlook — A rocky road to recovery in 2023
Markets may be jumping the gun when it comes to expectations for a policy pivot and the likely risk-asset rewards. Members of our Investment Strategy team still see bumps in the economic road, though their outlook has brightened a bit when it comes to China and other emerging markets.
2023 Insurance Outlook: Resolve to solve with a restocked toolkit
Multi-Asset Strategist Tim Antonelli and Insurance Strategist Max Davies share four actionable ideas designed to help insurers successfully navigate 2023.
Multi-Asset Outlook — Higher rates for longer: What does it mean for markets?
For central banks, the inflation fight is on, but the policy and market responses will vary in the coming months. Nanette Abuhoff Jacobson and Supriya Menon discuss the implications for equities, bonds, and commodities.
Inflation, rates, and volatility: The best defense is a good offense
Insurance Strategist Tim Antonelli shares his latest multi-asset views for insurers, including the need to balance defensive portfolio strategies with continued income and return generation.
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