Invesco Canada blog

Insights, commentary and investing expertise

Exchange-traded funds: Strategies for mitigating the new risks of the new year


Managing Director, Global Head of Invesco ETFs
December 14, 2018

Subject | 2019 Investment Outlook Series | ETFs | Industry views | Institutional | Invesco | Macro views

Key Takeaways

  • We see new risks on the horizon for both equity and fixed income investors, but there are various exchange-traded fund strategies that we believe can help.
  • We expect that a loss of profit momentum in 2019 could lead to increased volatility and correlations, and we believe that the Low Volatility and Quality factors may perform relatively well in such an environment.
  • With the overall climate still tilting in the direction of higher rates in 2019, one way to potentially manage that risk is to build bond ladders using defined-maturity bond funds.

In the new year, we see new risks on the horizon for both equity and fixed income investors. Equity markets are anticipating a loss of momentum for corporate profit growth. And, for the first time in 12 years, fixed income investors are forced to wrestle with the challenge of navigating a multi-year upward trend in interest rates at both the short and long end of the bond universe. There are various exchange-traded fund strategies that we believe can help with both challenges.

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Global economy: Three themes to watch in 2019


Chief Global Market Strategist | Global Market Strategist, EMEA
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco

Key takeaways

  • We believe economic growth divergence is likely to continue to some extent.
  • Geopolitical disruption is leading to structural fragmentation.
  • The debt problem is widespread and is becoming more burdensome as rates rise.

As we look out to 2019, we believe there are three key themes that will persist into the new year.

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Solutions: Heading into an uncertain 2019, diversification must be top-of-mind


CIO and Head of Global Advisory Solutions
December 14, 2018

Subject | 2019 Investment Outlook Series | ETFs | Institutional | Invesco | Macro views

Key takeaways

  • The road ahead is expected to be challenging due to a variety of factors: rising global interest rates, increased volatility, diverging global monetary policies, and heightened geopolitical tensions around trade and tariffs.
  • Our forecasts for returns are tepid across the major asset classes.
  • There remain pockets of opportunities within asset classes.

Heading into 2019, the market’s resiliency is likely to be tested by evolving geopolitical tensions and questions regarding the ability of a late stage economy to grow. Volatility is expected to remain elevated as the markets seek additional support for increasing asset prices beyond continued earnings growth and the perceived positive impact of tax cuts. However, the road ahead will likely be more challenging to navigate. While the economy, as measured by gross domestic product, continues to expand, and US equities are experiencing their second largest expansion in recent history, there are numerous challenges for investors to navigate going forward, including:

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Global economy: Global economy expected to grow with low inflation in 2019


Chief Economist, Invesco Ltd.
December 14, 2018

Subject | 2019 Investment Outlook Series | Institutional | Invesco | Macro views

Key takeaways

  • 2018 has been a year of turmoil, but, 2019 promises to be much calmer, in my view.
  • I believe the Federal Reserve should be successful in positioning the US economy for several more years of expansion.
  • Monetary policy invariably dominates fiscal policy in the determination of inflation

2018 has been a year of turmoil with weakness in the bond markets and two significant sell-offs in equity markets. In between there were crises in Venezuela, Argentina and Turkey; ongoing Brexit negotiations; a strong rise in the price of oil; and disruptions created by US President Donald’s Trump’s repeated trade measures — all set against a backdrop normalising US interest rates. However, 2019 promises to be much calmer, in my view.

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Federal reserve, economy, fiscal policy

Emerging markets: No shortage of reasons to be cautious in 2019


Head of Emerging-Markets Equities, Invesco Hong Kong Ltd.
December 14, 2018

Subject | 2019 Investment Outlook Series | Active management | Institutional | Macro views

Key takeaways

  • Emerging Markets (EM) face high uncertainty due to US equity market volatility and trade wars.
  • Yet we believe EMs as an asset class looks attractive as they are quite undervalued.
  • Quality has been out of favor in the EM markets in 2018, but we anticipate a reverse to the mean in the near future.

Emerging markets are one of the few asset classes where informational inefficiencies provide a fertile ground for bottom-up stock pickers (i.e., active investors) to add value. In our opinion, demographics, technology, decreased reliance on commodities and globalization all provide visible long-term growth potential.

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Multi-asset: The prolonged global expansion could continue if fiscal and monetary policies remain supportive


Product Director, Multi Asset
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • We take a two- to three-year view of the world when building our central economic thesis.
  • We believe it is vital to consider both cyclical and structural forces in building this thesis.
  • We believe that all of our ideas can make a positive return in our central economic scenario to ensure we have ideas that can excel in various economic conditions. However, it is important to note that our ideas do not derive from it.

2018 has been a relatively volatile year, however this has been limited to bouts of volatility while, rather surprisingly, levels of market volatility overall have remained fairly subdued.

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