The economy is getting its feet back on the ground after five years in which abundant public aid kept the global locomotive moving. Markets and the global economy have shown constant signs of resilience since the pandemic, but volatility has increased in recent months says Henk-Jan Rikkerink, Global Head of Solutions and Multi-Assets at Fidelity International, who outlines his outlook for the markets ahead. to the last quarter of 2024.
Without leaving the US, “we still really like this market, even though the valuations are more expensive, because we think it is a unique market, there are many multinational companies based in the US that are leaders and have a competitive advantage, to avoid being copied easily,” says Rubén García Páez, from Columbia Threandeedle, who believes that “in Europe we also continue to have very competitive multinationals, for example in the luxury industry, but there are others, such as automobile companies, that are suffering and we like them less, hence we are more selective.”
In this market, Fidelity’s Global Healthcare strategy has generated strong risk-adjusted returns over the seven years I have led the portfolio, with relative performance over the past 12 months standing out. During these two periods, the strategy has outperformed the global health index and obtained profitability in the first quartile, surpassing more than 80% of its competitors. In this perspective, I address some of the reasons why investors might consider adding this strategy to their portfolio.
While in Asia, “after a few years in which China has had quite restrictive measures for its economy, this aid of 800 billion yuan, which represents approximately 1.3% of its GDP, has been a breath of fresh air , and above all the markets have interpreted it that way. (…)These measures have been taken before the elections in the US. It is worth remembering that what is sustaining the growth of the Chinese economy are exports. In fact, in the last three or four years, the country has had a positive trade balance of about 700 billion dollars on average, and the other three components of growth – investment, public spending and consumption – are weak, hence China has “We wanted to boost consumer confidence and internal demand, so as not to depend solely on exports,” says Jorge Díaz, from Eurizon.
Thus, the economies continue to show a dichotomy in which the US continues to lead in the face of an Asian world that maintains the intention of returning to previous growth while Europe continues to play a residual role, in terms of growth.
Beyond China, sentiment has been more positive in various areas, especially on issues related to technology and India. More generally, past market cycles indicate that sentiment can often push valuations beyond what can reasonably be justified by fundamentals, leaving them open to a correction. At the beginning of August of this year, we witnessed one of these corrections, motivated by a confluence of changing expectations about economic growth, interest rates and the return to reality of excessive expectations regarding the profits of the technological titans. Americans. You are interested in: Opportunities in the next development of Asia.
All in all, “there are mixed data that must be considered for the configuration of the portfolio. “It is necessary in this environment to maintain positions in sectors that can continue to have significant growth, such as the technology sector, and also more defensive sectors such as health . There is also another strategy that can help mitigate portfolio risks, such as market neutrality or beta control,” says Carlos Arenas, head of Ei funds.
And that at a time when passively managed funds are only growing. If during the months of January and February, a notable increase in investments was observed in the global ETF market, we can now say that there has already been a consolidation in the exchange-traded fund industry. We are in a record year of fundraising of around 12 or 14 trillion inflows, with projections of up to 35 trillion in 2025-2030 and ETFs are already a more strategic long-term vision in the core part of the portfolios thanks to innovation that they contribute. From BNP Paribas AM, Fidelity and WisdomTree outline the benefits and opportunities offered by a product that has been gaining weight in portfolios such as ETFs.
On the other hand, bitcoin exchange-traded products (ETPs) are investment vehicles that offer investors clarity on the fees (i.e. management expense ratios) they must pay each year. The vast majority of bitcoin ETPs are physically backed by bitcoins held, on a 1:1 basis, in segregated “cold storage” accounts at the custodian.
The resolution of the presidential elections in the United States is also a cause of interest for cryptocurrencies. For this reason, Bernstein analysts Gautam Chhugani, Mahika Sapra and Sanskar Chindalia have pointed out in a note to clients that a victory for Donald Trump could take Bitcoin towards $90,000 and a victory for Kamala Harris would take it back to $40,000.