Investors should be thinking of single digit gains on a well-diversified portfolio but changing the way they achieve it.
The shifting fortunes for bond and share markets through 2016 rewarded those investors with a risk-orientated portfolio and once again highlighted the benefits of diversification.
A better economic footing and shift to fiscal over monetary policy should see shares do better relative to bonds and point investors towards more cyclical sectors over ‘bond like’ shares.
Investors should look to avoid longer maturity government bonds and think more about corporate credit for income. However, while the forces that created the demand for safe assets have diminished, they have not gone away and the search for both income and new forms of ‘safety’ within portfolios will continue to be crucial.
Source: JP Morgan