Investors will have to be more resourceful this year, according to one financial firm, because they will have to contend with low growth and low inflation hitting their assets.
So says JP Morgan Asset Management, which is urging investors to be more active in the search for profits. They say it’s the selection of the right investments which will be key to profitability this year.
A spokesman said: “The outlook for global performance this year is going to be far from thrilling with low growth and inflation and central banks will be active trying to accommodate borrowers.
“So while the economy is being friendly investors should be aware of their risks. Investors can find better opportunities but they will need to actively manage their portfolios and select the right assets.
“The markets are certainly optimistic about performance this year.”
The firm points to the markets’ strong finish in 2012 as being a positive for those investors interested in low risk assets and that momentum is continuing into this year.
Extreme risks
Optimism is also the word being used at Baring Asset Management which says is encouraging for investors.
They say the ‘extreme risks’ being faced by the markets in recent times have now been reduced.
A spokesman said: “We see the data from the US showing their economy is on the slow path to recovery but it’s still a recovery.
“We are cautiously optimistic about the fundamentals for the global economy and we can see further improvements.”
Like JP Morgan, Baring Asset Management also believes the extreme risks to the markets have been reduced.
The spokesman added: “From the politically-induced US fiscal cliff, which would have been an economic calamity, to the reduced prospect of the Euro breaking up, we are optimistic about the global economic outlook.”
However, the firm is warning that while the rebound appears to be underway – it is not going to be as strong as economic rebounds in previous years.
The spokesman added: “Our view is that the rebound will lack strength and the road to recovery will be a long one.”
Banks are changing
The increasing optimism for the markets this year should bring profitable opportunities for investors, says investment firm Invesco Perpetual.
They also believe that the new banking regimes are also a major boost to that confidence.
A spokesman said: “Financial services have been changing in recent years and we are seeing the credit crisis heal and this has brought change to the market – and with it more opportunity for investors.
“That’s because the tougher regulation brought in is seeing banks and financial institutions morphing into different organisations, compared to what they were.”