How to position a portfolio for resilience through a long bull
market, slowing global growth, presidential election year
Wells Fargo Investment Institute (WFII) today released its “2020
Outlook: A Call for Resilience,” which provides an in-depth
analysis of economic and market forecasts, including commentary
about the global economy, equities, fixed income, real assets,
alternative investments and portfolio implementation actions.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20191203005246/en/
WFII Economic and market forecasts
(Graphic: Business Wire)
“While this year was largely characterized by a tug-of-war
between substantial geopolitical drags and offsetting global
monetary policy easing, ironically all equity asset classes, and
even several fixed income asset classes, have delivered
double-digit returns, despite these concerns,” said Darrell Cronk,
president of WFII and chief investment officer of Wells Fargo
Wealth & Investment Management. “For now, we remain comfortable
that the expansion can again weather this storm, even while
traditional late-cycle signals abound.”
The report suggests three factors that are necessary for the
global economy to stay resilient:
- Consumer spending must remain solid.
- Credit spreads (fixed income) must remain well-behaved.
- China-U.S. trade dispute needs to de-escalate.
“Investors can instill resilience in their portfolios during
this tricky part of the economic cycle by wisely positioning
exposure to risk assets,” Cronk said. “Strong performance across
equities, fixed income and real assets affords investors a unique
and timely opportunity to ensure that position and exposure reflect
the right risk/reward.”
The outlook provides five ways investors can pivot away from
higher-risk asset classes:
- Cash has an important place in a portfolio.
- Focus on quality.
- Go beyond traditional fixed income for yield.
- Defense can be a good offense.
- Focus on longer-term diversification, as shorter periods are
likely to be volatile.
In addition, WFII’s focus themes for 2020 are Environmental,
Social and Governance (ESG) Investing and a recurring series guide
to the 2020 Elections.
Download “2020 Outlook: A Call for Resilience” and watch a video
with strategists discussing what they think the biggest investment
news stories will be in 2020.
Join the WFII 2020 Outlook webcast and conference call on
Tuesday, Dec. 10, at 4 p.m. Eastern time. The number is
855-458-0619.
About the Wells Fargo Investment Institute
Wells Fargo Investment Institute is a registered investment
adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a
bank affiliate of Wells Fargo & Company, providing investment
research, strategy, manager research and thought leadership within
the Wealth and Investment Management division, with the goal of
supplying world-class advice to the company’s financial and wealth
advisers.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,500 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 32 countries and territories to support customers who
conduct business in the global economy. With approximately 261,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 29 on
Fortune’s 2019 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at
Wells Fargo Stories.
Risks
All investing involves risks including the possible loss of
principal.
Diversification cannot eliminate the risk of fluctuating prices
and uncertain returns.
Stocks may fluctuate in response to general economic and market
conditions, the prospects of individual companies, and industry
sectors. Bonds are subject to interest rate, credit/default,
liquidity, inflation and other risks. Prices tend to be inversely
affected by changes in interest rates. Real assets are subject to
the risks associated with real estate, commodities and other
investments and may not be suitable for all investors.
Alternative investments carry specific investor qualifications
which can include high income and net-worth requirements as well as
relatively high investment minimums. They are complex investment
vehicles which generally have high costs and substantial risks. The
high expenses often associated with these investments must be
offset by trading profits and other income. They tend to be more
volatile than other types of investments and present an increased
risk of investment loss. There may also be a lack of transparency
as to the underlying assets. Other risks may apply as well,
depending on the specific investment product.
Sustainable investing focuses on companies that demonstrate
adherence to environmental, social and corporate governance
principles, among other values. There is no assurance that social
impact investing can be an effective strategy under all market
conditions. Different investment styles tend to shift in and out of
favor.
General Disclosures
Wells Fargo Investment Institute, Inc. (WFII) is a registered
investment adviser and wholly owned subsidiary of Wells Fargo Bank,
N.A., a bank affiliate of Wells Fargo & Company.
Opinions represent WFII’s opinion as of the date of this release
and are for general information purposes only and are not intended
to predict or guarantee the future performance of any individual
security, market sector or the markets generally. WFII does not
undertake to advise you of any change in its opinions or the
information contained in this release. Wells Fargo & Company
affiliates may issue reports or have opinions that are inconsistent
with, and reach different conclusions from, this report.
The information contained herein constitutes general information
and is not directed to, designed for, or individually tailored to,
any particular investor or potential investor. This report is not
intended to be a client-specific suitability analysis or
recommendation, an offer to participate in any investment, or a
recommendation to buy, hold or sell securities. Do not use this
report as the sole basis for investment decisions. Do not select an
asset class or investment product based on performance alone.
Consider all relevant information, including your existing
portfolio, investment objectives, risk tolerance, liquidity needs
and investment time horizon.
Wells Fargo Wealth and Investment Management, a division within
the Wells Fargo & Company enterprise, provides financial
products and services through bank and brokerage affiliates of
Wells Fargo & Company. Brokerage products and services offered
through Wells Fargo Clearing Services, LLC, a registered
broker-dealer and non-bank affiliate of Wells Fargo & Company.
Bank products are offered through Wells Fargo Bank, N.A.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191203005246/en/
Media Allison Chin-Leong, 212-214-6674
Allison.Chin-leong@wellsfargo.com
Kelly Reilly, 314-797-9701 Kelly.Reilly@wellsfargo.com
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