Canadian Quarterly Investment Outlook - January 2020 (CA)

The article above is Aon's latest quarterly investment outlook for Canadian markets in January 2020. Download the article above to learn more. 


Summary

  • The strength in both risky and safe asset prices last year reflected a large easing in monetary conditions as central banks cut interest rates sharply and grew balance sheets once again. The Bank of Canada was an outlier but may join the monetary easing party soon.
  • Fears for the global economy have eased, Coronavirus notwithstanding, but we should keep perspective. Trade uncertainty remains and the limited interest rate cuts that were possible spell only a modest economic rebound.
  • The ‘lower for very much longer’ interest rate environment looks to be more deeply embedded than ever.
  • Credit spreads are again on the wrong side of our fair values. With yields on corporate bonds now low, the margin for comfort on returns is thin. We suggest some coping strategies.
  • The secret sauce of the bull market, record high profit margins in the U.S., is not going to be as supportive of markets looking ahead.
  • Central bank actions have brought a respite for markets but it is still just a matter of time before unsettled conditions return. Portfolio actions need to remain focused on higher market risk and lower returns that will likely follow this period of strength.


1 Indices cannot be invested in directly. Unmanaged index returns assume reinvestment of any and all distributions and do not reflect fees or expenses. Please see appendix for index definitions. Past performance is no guarantee of future results

Market data source Factset

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.


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About Aon Global Asset Allocation

Where are we in the economic cycle? What is the relative value of different asset classes? How are technical factors, such as regulation, impacting prices? Aon’s Global Asset Allocation team continually asks and answers questions like these. We use our findings to help clients make timely decisions about asset allocation in their schemes’ portfolios.

With over 160 years of combined experience, the team is one of the strongest in UK investment consultancy today.

Our experts analyse market movements and economic conditions around the world, setting risk and return expectations for global capital markets.

The team use those expectations to help our clients set and, when it’s right to do so, revise their long-term investment policies.

We believe that the medium-term (1–3 years) has been under exploited as a source of investment performance. Maintaining medium-term views that complement our long-term expectations, we help our clients to determine when to make changes to their investment strategy.


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