Outlook for 2019 suggests investment opportunities exist despite persistent market volatility and moderate market returns
December 05, 2018 – Wells Fargo Investment Institute today released “2019 Outlook: The End of Easy,” offering guidance to investors for the coming year. It suggests 2019 will be marked by ever-changing conditions as the economic recovery of the past decade decelerates. “2018 brought an end to exceptionally low volatility and above-average asset returns across equities, fixed income and currencies,” said Darrell Cronk, president of Wells Fargo Investment Institute and chief investment officer of Wells Fargo Wealth and Investment Management. “Trends of the past decade — equity and bond prices rising together, domestic markets outperforming international markets, outsized investor performance coming from only a few equity sectors — are now shifting. We are not living in a world of smooth sailing, and investors must be more stringent in 2019 when positioning their portfolios to achieve gains and pare risk.”
The outlook provides five areas for investors to consider in 2019:
1. Expect growth in equity markets, as we estimate emerging market-growth of up to 20 percent.
2. Consider enough bonds, because they may help stabilize portfolios when equities decline.
3. Include international assets, which could be helped by a weaker U.S. dollar and trade progress.
4. Lower allocations to the most rate-sensitive assets, including REITs and most bonds.
5. Strive to manage volatility risk with a portfolio mix of asset classes that spans sizes, geographies and sectors as competition among companies intensifies.
Download “2019 Outlook: The End of Easy” for an in-depth analysis of economic and market forecasts with emphasis on the global economy, equities, fixed income, real assets, alternative investments and portfolio implementation actions. Watch a video with strategists discussing what could surprise the markets in 2019.
The institute will produce thematic research in 2019 on longer-term themes for investors to watch:
- China’s place in the world
How China’s rise relates to the dominance of the U.S. dollar, trade, capital markets and the economy.
- New approach to retirement
Investors across the baby boomer, Generation X and Millennial generations prepare differently.
- How do recoveries end? Anatomy of the next recession
What the next recession will look like and how investors can prepare their portfolios accordingly.
To learn more about the Wells Fargo Investment Institute 2019 Outlook, join Cronk and strategists for a conference call on Tuesday, Dec. 11, 2018, at 4 p.m. Eastern time; 855-458-0619.
About Wells Fargo Investment Institute
Wells Fargo Investment Institute (WFII) is a registered investment adviser and wholly-owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, providing investment research, strategy, manager research and thought leadership within the Wealth and Investment Management (WIM) division, with the goal of supplying world class advice to the company’s financial and wealth advisers. WIM is one of the largest wealth managers in the U.S., with $1.9 trillion in client assets. WIM includes Wells Fargo Private Bank, serving high-net-worth individuals and families; Wells Fargo Advisors, the third-largest brokerage firm in the U.S.; Wells Fargo Retirement, which manages $330 billion in employer-sponsored retirement plan assets for 3.9 million Americans; and Abbot Downing, serving ultra-high-net-worth individuals and families. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC, and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investments, mortgage, and consumer and commercial finance through 8,200 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.
Stocks may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Foreign investing has additional risks including those associated with currency fluctuation, political and economic instability, and different accounting standards. Bonds are subject to interest rate, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. Real estate has special risks including the possible illiquidity of underlying properties, credit risk, interest rate fluctuations and the impact of varied economic condition.
Alternative investments carry specific investor qualifications which can include high income and net-worth requirements as well as relatively high investment minimums. They are complex investment vehicles which generally have high costs and substantial risks. The high expenses often associated with these investments must be offset by trading profits and other income. They tend to be more volatile than other types of investments and present an increased risk of investment loss. There may also be a lack of transparency as to the underlying assets. Other risks may apply as well, depending on the specific investment product.
Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns.