As we look ahead to 2023, M&G’s Chief Investment Officers (CIOs) share their perspectives on the key themes influencing financial markets. With major central banks raising interest rates aggressively to control high inflation and worries about the global economic outlook growing, there are currently plenty of uncertainties for investors to navigate. However, are there also grounds for optimism about the future? Fabiana Fedeli, CIO Equities, Multi Asset and Sustainability, Jim Leaviss, CIO Public Fixed Income, and Will Nicoll, CIO Private & Alternative Assets discuss the potential challenges that lie ahead for their asset classes in the coming year and highlight where they see promising investment opportunities.
With concerns about inflation, a potential global economic slowdown and ongoing geopolitical tensions likely to be front of investors’ minds in the coming months, Fabiana Fedeli, CIO Equities, Multi Asset and Sustainability believes this is not a market for broad strokes investing. In her view, active investors can harvest alpha, but selectivity will be key. Fabiana thinks longer term themes such as renewables and infrastructure remain appealing, irrespective of the near-term economic situation. Despite a challenging time recently, she also believes sustainable investing is here to stay and is a key solution to the world’s biggest challenges.
Fabiana Fedeli, CIO Equities, Multi Asset and Sustainability
Jim Leaviss, CIO Public Fixed Income, is optimistic about the outlook for bonds. In his view, inflation is likely to gradually ease in the coming months and central banks may be able to slow the pace of their interest rate hikes. Jim believes there is significant value in corporate bonds today as markets are pricing in a lot of bad news and default rates that he thinks are excessive. Jim also believes emerging market bonds offer value currently, although he cautions that a selective approach is important when selecting investments.
Jim Leaviss, CIO Public Fixed Income
Adjusting to a new regime of higher interest rates is likely to be an important theme in the coming year, observes Will Nicoll, CIO Private and Alternative Assets. While the economic conditions may be challenging, Will believes many parts of the private markets are well placed to weather the storm and there could be interesting and attractively valued ideas across the asset classes. He is also optimistic about the continued growth of the asset class, supported by tailwinds such as growing interest in sustainable and impact investing and the opening up, or “democratisation”, of the private assets to a new category of investors.
Will Nicoll, CIO Private and Alternative Assets
The value of investments can go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. Past performance is not a guide to future performance. The views expressed on this page should not be taken as a recommendation, advice or forecast.
M&G’s CIOs, Fabiana Fedeli, Will Nicoll and Jim Leaviss share their views as we head into 2023, discussing valuation opportunities, the depth of a potential recession – and how much closer we are to the light at the end of the tunnel of rate hikes and rising inflation.
Fabiana Fedeli, Chief Investment Officer, Equities, Multi Asset and Sustainability
Will Nicoll, Chief Investment Officer, Private and Alternative Assets
Jim Leaviss, Chief Investment Officer, Public Fixed Income
Romil Patel, Senior Editorial Manager