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The reopening of the economies after Covid caused a sharp rise in inflation. Central banks were slow to react, but in the end had no choice but to raise rates. This is just one of five macro-trends that we expect to define the coming years as we enter a new economic regime.
We indicate the implications that a new regime will bring to the investment world as well as the main challenges and opportunities arising from it.
Consequences for investors
The regime shift brings with it the need to adopt a new perspective on the investment landscape. There are three key changes we identified:
- The role of fixed income in portfolio construction will be more linked to the returns it offers rather than the diversification it brings.
How does the increase in correlation affect investors?
- The valuation of assets to distinguish between winners and losers in different regions and sectors will be more demanding.
- Commodities, after a difficult period, will have a key diversifying role.
How to find opportunities in this new era?
In this new era of investment, the lessons of the past may be out of step and investors may feel lost and unsure how to navigate in this context.
Equities: where to find the best opportunities in this regime shift?
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