- Central banks are set to reduce their interventionist approach
- Productivity will increase despite an aging workforce
- Next recession expected around mid-2020
- Governments to relax their focus on regulation, consider protectionist policies
- Non-traditional strategies on track to offer best risk-reward
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MONTREAL, NEW YORK and LONDON, Sept. 27, 2017 /PRNewswire/ - Fiera Capital Corporation (TSX: FSZ) ("Fiera Capital" or the "Firm"), a leading independent asset management firm with more than C$125 billion (approximately US$ 100 billion) under management, released today its first Global Financial Forecast 2017-2024 ("Report"). Looking ahead seven years, the usual length of an economic cycle, the forecast seeks to provide guidance for investors who are seeking both to structure their portfolios within the current market environment and prepare for future policy developments.
Francois Bourdon, Global Chief Investment Officer, commented: "Over the last seven years, the global economy has taken significant strides to recover from the 2008 credit crisis. Financial markets have been driven by extraordinary actions from central banks, a thirst for yield, falling productivity and a prolonged expansion characterized by very low inflation. Following this unusual period we expect the next seven years to be characterized by a return to a more traditional business cycle, in both central bank activities and in productivity. An aging population should continue to drive investors towards income, and politics are likely to have a greater impact than usual."
Five Key Global Drivers
The Report outlines five key global trends that may influence and characterize the investment environment over the next seven years. These are:
- Productivity: Productivity is expected to improve from current levels as local economies leverage advances in technology including artificial intelligence and the increased use of robots.
- Demographics: We believe that an aging population will have a negative impact on growth while the higher dependency ratio will spur inflation.
- Business Cycle: While a recession is not expected in the next couple of years, one could be expected after 2020 - and an accompanying recovery - within the next seven years, if it follows previous cycles. The path towards recession will likely come from a tightening of credit from central banks as the current cycle becomes more mature and inflation pressures warrant higher interest rates.
- Central Banks: We believe the role of central banks will decrease over time as the global economy normalizes.
- Politics: As the ghosts of the previous crisis are forgotten, governments are expected to relax their focus on regulation in order to improve efficiency and productivity. However, protectionist temptations and the ongoing focus on nationalism among politicians of various affiliations is likely to continue.
Regarding politics, Jonathan Lewis, Chief Investment Officer, U.S. Division, commented:
"Political risk in the US is rising, geopolitical tensions are escalating, and it is unclear whether this untested Administration is prepared for the challenges ahead. These risks are difficult for markets to assess, and so the markets have chosen to ignore them. Overvalued markets and undervalued risks are an unhealthy combination."
Four Key Financial Market Factors
Four key factors are identified in the Report which we believe are set to impact financial markets going forward:
- Growth: An increase in consumer demand will spur growth levels, with economies expanding across most geographies. Growth in the U.S. is expected to approach three percent, on a par with its historical average.
- Inflation: Investors can expect higher rates of inflation over the next seven years. As a result of past monetary policy decisions starting to have an impact on stimulating demand, the global economic focus will shift from deflationary fears towards inflationary pressures. Inflation in the U.S. is predicted to rise to 2.5 percent.
- Valuations: Valuations may normalize towards 2024, with interest rates expected to rise to the 4-5 percent range as we escape progressively from the current unusual period of emergency interest rates and low inflation.
- Liquidity: Given lower levels of central bank activity, liquidity will be reduced progressively.
How to structure your portfolio for the future?
The Report also provides information on how investors may want to structure their portfolios to meet their investing goals:
- For investors seeking income, non-traditional asset classes such as core agriculture, core infrastructure, private lending may offer compelling performance. Also, preferred shares and high-yield bonds have the potential to perform well within traditional income options.
- For investors seeking capital gains, private equity and long-short equity are expected to provide better returns. In traditional equity markets, large-cap emerging and large-cap frontier are expected to outperform large cap developed markets and mid cap global asset classes.
Julian Mayo, Senior Vice President and Investment Strategist, Charlemagne Capital, European Division, commented: "After five difficult years, emerging markets started transitioning in early 2016 and now reflect a more positive outlook. Their recovery is fairly robust and broad based and we believe this asset class should perform well over the next few years."
The information and opinions expressed herein and the Report are provided for informational purposes only, are subject to change and should not be relied upon as the basis of any investment or disposition decisions. Past performance is no guarantee of future results. All investments pose the risk of loss and there is no guarantee that any of the benefits expressed herein will be achieved or realized.
The information provided herein and in the Report does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information. Any opinions expressed herein or in the Report reflect a judgment at the date of publication and are subject to change. Although statements of fact and data contained in this press release and the Report have been obtained from, and are based upon, sources that we believe to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. No liability will be accepted for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material.
Certain information contained herein and in the Report constitutes "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue," or "believe" or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance may differ materially from those reflected or contemplated in such forward- looking statements.
Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any funds or accounts managed by any member of the Fiera Group of companies. For more information please also consult the Report at the link set out above.
Each member of the Fiera Group of companies only provides investment advisory services or offers investment funds in the jurisdictions where such member and/or the relevant product is registered or authorized to provide such services pursuant to an exemption from such registration. These include the entities listed below. Where an entity operates under an exemption from registration (the "Exempt Entities"), only its jurisdiction of incorporation is listed. Details on the particular registration and offering exemptions for the Exempt Entities' activities are available upon request.
- Fiera Capital Corporation – Canada, registered: (i) in the categories of exempt market dealer and portfolio manager in all Provinces and Territories of Canada (ii) in the category of investment fund manager in the Provinces of Ontario, Québec, Newfoundland and Labrador; (iii) as a commodity trading manager pursuant to the Commodity Futures Act (Ontario), (iv) as an adviser under the Commodity Futures Act (Manitoba) and, (v) in Québec, as derivatives portfolio manager pursuant to the Derivatives Act (Québec);
- Fiera Capital Inc. – United States, registered as (i) an investment adviser with the U.S. Securities and Exchange Commission (the "SEC")* and (ii) a commodity pool operator with the U.S. Commodity Futures Trading Commission.
- Bel Air Investment Advisors LLC—United States, registered as an investment adviser with the SEC*.
- Charlemagne Capital (UK) Limited – United States, registered as an investment adviser with the SEC*. United Kingdom, authorized and regulated by the Financial Conduct Authority.
- Charlemagne Capital (IOM) Limited – United States, registered as an investment adviser with the SEC*. United Kingdom, licensed by the Isle of Man Financial Services Authority.
- Charlemagne Capital Limited – A company registered in the Cayman Islands.
- Fiera Properties Limited – A corporation incorporated under the laws of the province of Ontario (Canada).
- Fiera Private Lending Inc. – A corporation incorporated under the laws of the province of Québec (Canada).
- Fiera Infrastructure Inc. – A corporation incorporated under the laws of Canada.
- Fiera Comox Partners Inc. – A corporation incorporated under the laws of Canada.
*Registration with the SEC does not imply a certain level of skill or training.
About Fiera Capital Corporation
Fiera Capital is a leading independent asset management firm with more than C$125 billion in assets under management as of June 30, 2017. The Firm provides institutional, retail and private wealth clients with access to full-service integrated money management solutions across traditional and alternative asset classes. Clients and their portfolios derive benefit from Fiera Capital's depth of expertise, diversified offerings and outstanding service. Fiera Capital trades under the ticker FSZ on the Toronto Stock Exchange. www.fieracapital.com
In the U.S., asset management services are provided by the Firm's U.S. affiliates, Bel Air Investment Advisors LLC and Fiera Capital Inc., investment advisers that are registered with the U.S. Securities and Exchange Commission (SEC). Further, Charlemagne Capital (UK) Limited and Charlemagne Capital (IOM) Limited are both registered as investment advisers with the SEC. Charlemagne Capital (UK) Limited is authorized and regulated by the Financial Conduct Authority in the United Kingdom and Charlemagne Capital (IOM) Limited is licenced by the Isle of Man Financial Services Authority. Registration with the SEC does not imply a certain level of skill or training. Additional information about Fiera Capital Corporation, including the Firm's annual information form, is available on SEDAR at www.sedar.com.
SOURCE Fiera Capital Corporation