In this article:
Introduction by Paras Anand, Head of Asset Management, Asia Pacific
If investors wanted a quiet summer period, they didn’t get it. The third quarter saw no resolutions to the many risks weighing on the markets and introduced a few new ones. To the US-China trade war, global recession fears and Brexit we can add yield curve inversion, Hong Kong protests, a higher risk premium on oil as a result of Saudi production facility attacks and the threat of impeachment of the US president.
But no resolution does not mean an absence of progress. Central banks have turned dovish rhetoric into material action in both developed and emerging markets, which, along with lower bond yields that support growth and targeted Chinese fiscal and monetary stimulus, gives us some comfort.
For now, the economy is bending, not breaking. In this environment we suggest portfolios are tilted towards safety but remain exposed to risk assets. That means a quality bias in equities, favouring US government bonds for protection in market sell-offs and being more selective on tenant exposure within real estate. As we enter the fourth quarter, there’s plenty in the calendar to keep markets anything but quiet.
The Investment Outlook is our flagship quarterly outlook publication that outlines our views on all the major asset classes including equities, fixed income, multi asset and real estate, and details the 'house view'. The views are built on the fundamental research that we undertake on markets, companies, governments, issuers, third-party managers, properties and tenants.
Fidelity’s Global Asset Allocation process combines the granular, on-the-ground views of our research analysts together with a macroeconomic and quantitative framework driven by our strategists. Each quarter, we bring together our regional and thematic experts from across the world to participate in the Quarterly Investment Forum (QIF), where we discuss macroeconomic and geopolitical conditions and how they will impact markets. Each asset class division incorporates this shared understanding into their respective investment and asset allocation decisions. Every month, we hold Global Asset Allocation meetings where divisional Chief Investment Officers (CIOs), global portfolio managers and strategists share and debate views on macro conditions, markets and cross-asset allocation to produce the house view.
Fidelity’s Global Asset Allocation process is led by: Paras Anand, Head of Asset Management, Asia-Pacific, Anna Stupnytska, Head of Global Macro and Investment Strategy (GMIS) and Wen-Wen Lindroth, Lead Cross-Asset Strategist.