INVESTMENT DIRECTIONS

Rethinking risk, rethinking returns

Nov 21, 2017
By BlackRock

In-depth market commentary, analysis and actionable investment ideas from BlackRock’s leading strategists.

 

Fly like an eagle

As markets continue to climb higher, investor sentiment seems to have turned from doubt to acceptance. Economic growth is above trend in most regions of the world, keeping us aloft, but we don’t appear to be soaring too dangerously and in peril of overheating. It is a good time to consider seeking out risk for the portfolio, but with many asset classes still pricey, where do we find opportunities? Given BlackRock’s recent fourth-quarter outlook, we see interesting potential opportunities in four areas.

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The value of value

Momentum stocks have shined this year. But we also favour the value factor, and believe that it could benefit from an environment characterized by sustained global expansion and, more recently, higher energy prices, as well as the potential for rising rates.

Europe: Room to run

Despite recent headline noise around Spain and stubbornly low inflation, we believe the rally in Europe, which has outperformed other developed markets this year, still has legs. Ongoing expansion and strong earnings underscore this view.

Emerging markets: Still in the early chapters

The strong outperformance of EM stocks in 2017 has investors wondering if the rally’s days are numbered. We believe the strong performance can continue, as the underlying fundamentals of emerging markets are improving.

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