Phil Edwards, Mercer Investments’ Global Director of Strategic Research tells Asset TV whether the success of the 60/40 investment portfolio will continue. He also shares action steps investors can take in a rising inflation and rising yield world.
Before considering what portfolio changes might be appropriate, investors need to have a clear idea of the economic/market outcomes they are least able to tolerate.
With equity markets reaching new highs and bond yields remaining extremely low by historical standards, portfolios dominated by equities and bonds that have worked well over the past eight years are likely to face material headwinds over the next five to 10 years. These include low forward-looking return expectations given starting valuations and the potential for a change in the behavior of equities and bonds under certain economic scenarios.