The heads of our investment platforms identified the key themes they anticipate will guide investment decisions in 2021. These 10 themes are summarized below and discussed in more detail in the full Solving for 2021 publication.
Ten for 2021
MACRO: THE WORLD AFTER THE CORONAVIRUS
- A RETURN TO EARLY-CYCLE DYNAMICS—BUT NO SUBSTANTIAL REFLATION
Following many years of late-cycle dynamics, the coronavirus pandemic caused a deep recession that has set a low base from which to rebound. We now face early-cycle dynamics not seen for a decade...
- POPULISM IS HERE TO STAY
The end of Donald Trump’s presidency is not the end of political populism or its causes, in our view...
ACCELERATED DIGITAL TRANSFORMATION PUTS DOWN ROOTS
During the coronavirus crisis, many consumers and businesses have fully embraced working, shopping and accessing services from home…
SUPPLY CHAINS BECOME SHORTER AND MORE DIVERSIFIED
Geopolitical uncertainty, economic populism and simple wage and cost convergence have been shortening global supply chains for more than a decade already. The coronavirus pandemic added further impetus to this trend…
FIXED INCOME: STATIC YIELDS, VOLATILE CURRENCIES
- LOW YIELDS AND FLAT CURVES DEMAND OPPORTUNISM IN CREDIT MARKETS
As with every recession, the 2020 coronavirus recession caused credit spreads to widen. Rapid and substantial central bank intervention made this an exceptionally short-lived phenomenon, however…
- MACROECONOMIC DYNAMICS WILL BE EXPRESSED THROUGH CURRENCIES
With rates volatility suppressed, worldwide growth and inflation differentials are more likely to be expressed through currency markets…
EQUITIES: CYCLICAL OPPORTUNITIES, LONG-TERM THEMES
- SECULAR GROWTH STOCKS ULTIMATELY PREVAIL OVER CYCLICAL RALLIES
Early-cycle dynamics will likely favor cyclical stocks initially as economic growth accelerates, but ultimately, we believe the looming backdrop of secular stagnation will lend support to quality growth stocks and long-duration assets…
- A THEMATIC APPROACH CAN HELP TO UNCOVER LONG-TERM GROWTH
In a low-growth world, a thematic approach can help identify genuine long-term growth opportunities…
ALTERNATIVES: RESILIENCE FOR GROWTH, NIMBLENESS FOR VALUE
- RESILIENT GROWTH WILL BE IN FAVOR—BUT IT WON’T COME CHEAP
We have seen the coronavirus crisis accelerate the trend for private equity to favor businesses with resilient growth prospects and executable plans to add value…
- A CONTINUING ROLE FOR OPPORTUNISTIC AND IDIOSYNCRATIC STRATEGIES, LIQUID AND ILLIQUID
Next year will likely bring an unusual mix of early- and late-cycle dynamics, and ongoing pandemic and policy questions. Any resulting volatility or uncertainty is likely to create windows of opportunity for liquid strategies such as equity long/short, distressed and short-term trading strategies, but also for less liquid strategies such as private equity secondaries, opportunistic credit and structured equity…
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