Clarity after uncertainty? The investment outlook for 2013

Attractive opportunities in selected asset classes

On the eve of a new year, the challenges appear clearer and the processes that could lead to their resolution now seem in place. Nevertheless, there are still many pitfalls for investors to negotiate.

Although we expect the global economy to do better in 2013 than in 2012, a strong recovery looks unlikely. The effects of fiscal austerity will likely increase and uncertainties about the course and sustainability of fiscal policy will remain. Inflation should stay low in our view, but we expect no new monetary policy initiatives. In emerging economies, growth should improve; monetary policy will likely not be loosened further.

The environment can be summarised as 'lower for longer', especially when it comes to bond yields and inflation. We struggle to see a catalyst for sustained gains in equities, but nevertheless expect opportunities to benefit from shorter-term rallies.

The asset classes that we believe could be a good choice in 2013 are US equities, emerging market equities, high income equity, local emerging market debt, high-yield bonds, convertible bonds and renewable energy.

We expect 2013 to shed more light on the implications and effectiveness of government and central bank actions to tackle sub-par world economic growth in what will likely be a year of market timing for investors.

Click here for the detailed investment outlook and here for an interview with chief investment officer Strategy & Partners William De Vijlder and investment specialist - allocation & strategy Joost van Leenders on the 'big picture' for 2013.