Investment experts at Atlantic Trust believe the much-anticipated "Great Surge" has not yet materialized, but the U.S. economy is showing signs of momentum
ATLANTA, Jan. 23, 2014 /PRNewswire/ - Expect a more challenging, mature bull market combined with muted returns in 2014, according to the experts at Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE : CM ).
Atlantic Trust's Chief Investment Officer David L. Donabedian, CFA, predicts volatility in the market is likely to increase as the Federal Reserve eases off on its uber-stimulative monetary policies. The Fed, which had seemingly been operating in crisis mode for the last five years, took its first steps in acknowledging that the crisis is mostly over by announcing in December plans to scale back and eventually phase out its monthly bond purchases.
"As the Yellen Fed seeks to navigate an orderly path to more normal monetary policy, it is unlikely to be a seamless transition," he says. "While valuations appear reasonable on balance, stocks are not cheap. While we expect moderate earnings growth, the profits cycle seems mature."
U.S. stocks, which saw returns in excess of 30% in 2013, far surpassed both developed and emerging markets. However, given that equities now seem to hover around fair value, along with a likely high-single-digit earnings growth path, Donabedian believes that a return closer to the S&P 500 Index's long-term average of 10% is a reasonable expectation for 2014. Much of that will depend on the future growth of the global economy.
From an asset allocation perspective, Donabedian believes stocks should again outperform bonds and cash this year, while hedged strategies are beginning to look timely. Non-U.S. stocks -- particularly from emerging markets -- are also likely to add value in 2014. Despite some challenges brought on by currency devaluation and inflation, Donabedian recommends maintaining a position in emerging markets, as he believes they continue to represent the best long-term play on growth.
Donabedian also notes that conditions are slowly but steadily improving for U.S. consumers, the government sector and the housing market as unemployment continues to fall and consumer spending increases. Discretionary income, which had been negatively impacted by last year's income, payroll and investment tax increases, is also increasing.
For business investments, perhaps the most stubbornly sluggish sector of the economy, Atlantic Trust anticipates a boost in corporate capital investments this year as businesses begin to invest in new productivity enhancements and growth initiatives to boost future profits.
The experienced team of investment strategy professionals at Atlantic Trust designs investment portfolios that seek to reduce the impact of market volatility while the team also attempts to capitalize on a broad range of investment opportunities on behalf of clients. Visit www.atlantictrust.com for more information, or explore Atlantic Trust's Online Resource Center for additional investment and wealth management resources.
About Atlantic Trust
Atlantic Trust is one of the nation's leading private wealth management firms, offering integrated wealth management for high-net-worth individuals, families, foundations and endowments. The firm considers clients' financial, trust, estate planning and philanthropic needs in developing customized asset allocation and investment management strategies. Experienced professionals deliver a broad range of solutions, including proprietary investment offerings and a robust open architecture platform of traditional and alternative managers. Atlantic Trust operates in 12 full-service locations throughout the U.S. with $24.0 billion in assets under management (as of December 31, 2013). For more information, visit www.atlantictrust.com.
CIBC is a leading Canadian-based global financial institution. Through our Retail and Business Banking, Wealth Management and Wholesale Banking businesses, CIBC provides a full range of financial products to individual, small business, commercial, corporate and institutional clients in Canada and around the world.
CIBC Wealth Management provides relationship-based advisory services and an extensive suite of leading investment solutions to meet the needs of personal, institutional and high-net-worth clients through an extensive distribution network that includes CIBC Private Wealth Management, CIBC Wood Gundy and CIBC Investor's Edge. Our asset management, retail brokerage and private wealth management businesses combine to create an integrated offer, delivered through nearly 1,500 advisors across Canada. In addition, CIBC Asset Management provides global money manager services to institutional and high-net-worth clients and industry-leading retail investment solutions through our two mutual fund families—CIBC and Renaissance—and the CIBC family of managed portfolio solutions.
SOURCE Canadian Imperial Bank of Commerce