Wells Fargo: calling for resilience in 2020

With 2020 fast approaching, Business Chief USA takes a look at Wells Fargo’s outlook for the new year.

Within its outlook, Wells Fargo Investment Institute highlights three factors that are necessary for the global economy to stay resilient in the upcoming years:

• Solid consumer spending

• Fixed income must remain ‘well-behaved’ 

• Disputes between China and the United States need to de-escalate

“Investors can instill resilience in their portfolios during this tricky part of the economic cycle by wisely positioning exposure to risk assets,” comments Darrell Cronk, president of Wells Fargo Investment Institute and chief investment officer of Wells Fargo Wealth & Investment Management. “Strong performance across equities, fixed income and real assets affords investors a unique and timely opportunity to ensure that position and exposure reflect the right risk/reward.”

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To move away from higher risk asset classes the outlook focuses on five core ways:

• Cash alternatives

• Quality

• Go beyond traditional fixed incomes

• Play defence with equity sector allocations

• Long-term diversification

In addition to the above, the outlook highlights its core focus theme for 2020 - environmental, social and corporate governance (ESG) investment. “Studies suggest that over the long term, ESG-driven and responsible investment strategies historically have met or exceeded the performance of comparable traditional investments,” says Wells Fargo Investment Institute.

Cronk concludes that “while this year was largely characterised by a tug-of-war between substantial geopolitical drags and offsetting global monetary policy easing, ironically all equity asset classes, and even several fixed income asset classes, have delivered double-digit returns, despite these concerns, for now, we remain comfortable that the expansion can again weather this storm, even while traditional late-cycle signals abound.”

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