2021: A year of hope and challenge

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In our second annual sentiment survey we asked our fund managers and analysts for their views on the year ahead. Read on to learn their views on what 2021 may bring.

If 2020 was the year that wasn’t, 2021 looks like the year that will be. Already, successful vaccines have been tested and roll-out has begun. Lockdowns continue but infection and mortality rates are falling or stable in many major economies. For now, at least, there seems to be light at the end of the pandemic tunnel. What this means for markets in the coming 12 months remains an open question, however.

Up, down and sideways: which way for markets in 2021?

Source for all charts: BNY Mellon Investment Management 2021 sentiment survey, 8 December 2020.

One school of thought says we can look forward to the mother of all resurgences fuelled by sky-high savings rates and pent-up demand. Supercharged index returns at the end of the year point to the same conclusion. The ‘everything rally’, for example, saw the MSCI All-Country World index climb another 12.2% in November alone — its best month on record — to touch new all-time highs.¹

Those of a less Panglossian mind-set, however, point to lasting damage wrought by Covid-19, with unemployment and the economic dislocation caused by multiple lockdowns taking the fire out of any recovery as the year wears on. Others point to a more nuanced reading, noting the potential for some parts of the world to bounce back relatively quickly even as other regions struggle to make headway.

Matt Oomen, global head of distribution, BNY Mellon Investment Management, notes the numerous investment challenges of the past 12 months but says this is all the more reason to look forward to the coming year with hope.

“It’s been a difficult year on so many fronts,” he says. “The pandemic has knocked the economy and society sideways: public health, employment, political and cultural norms, sporting activities, travel, the hospitality industry. Each of us in so many ways has been affected. We can’t know what the New Year will bring but we can take an educated guess and that’s why I think it’s made sense to gauge the thoughts and views of our experts across so many asset classes within investment management.”

Given such an uncertain backdrop, the results of BNY Mellon Investment Management’s second annual sentiment survey makes for interesting reading. As in previous years, our aim was to sample views across five of our investment firms with BNY Mellon IM.² In total, we received responses from 106 fund managers and analysts, with opinions on everything from the pace of any economic resurgence, to the scope for rising volatility, to the best place to find income in a low-yield world.

Some of this year’s stand-out responses are illustrated on the interactive infographic above (click out for a larger view). Who would have thought that this year Asia would overtake the US as the region considered most likely to present investment opportunities? Or that there would be so little consensus on the most pressing risk in the year ahead?

As ever, we can only know what we can know – but we hope our Markets2021 coverage will provide at least some guidance on the likely direction of travel in the year ahead.

¹ Financial Times: ‘The ‘everything rally’: vaccines prompt wave of market exuberance’, 3 December 2020.
² Alcentra, Insight, Mellon, Newton and Walter Scott.

Important information:

https://www.bnymellonim.com/outlook/global-disclosure/

GE 201337 EXP: 8 JUNE 2021

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