{"id":57558,"date":"2016-10-24T01:35:00","date_gmt":"2016-10-23T23:35:00","guid":{"rendered":"http:\/\/beta.next-finance.net\/strategie\/opportunities-in-a-low-return-landscape\/"},"modified":"2019-12-31T01:13:04","modified_gmt":"2019-12-31T00:13:04","slug":"opportunities-in-a-low-return-landscape","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/strategie\/opportunities-in-a-low-return-landscape\/","title":{"rendered":"Opportunities in a low-return landscape"},"content":{"rendered":"

Many investors have favored perceived safer assets in recent years, but we
\nbelieve a reflationary environment is taking shape that will reward selective risk
\ntaking. Structural economic changes should keep bond yields low for many
\nyears, in our view. This should make risk assets such as emerging market (EM)
\nbonds and global equities relatively more attractive. See the chart above.<\/p>\n

\"blackrock_s_five-year_asset_class_return_assumptions_october_2016.jpg\"<\/a><\/p>\n

Taking risk where it\u2019s most rewarded<\/strong><\/p>\n

Big structural changes to the world economy \u2014 think aging populations and weak productivity growth \u2014 along with supply\/demand
\nimbalances should keep government bond yields low for many years. This represents a sea change for how investors need to
\nconsider diversifying portfolios. For example, we see a global portfolio consisting of 60% equities and 40% bonds generating a
\nnominal annual return of just 3% in U.S. dollar terms over the next five years before fees, based on our asset return assumptions.<\/p>\n

With the global economy showing some signs of a reflationary tilt as U.S. growth accelerates, investors aren\u2019t being compensated for
\nthe risks tied to many perceived safer assets, we believe. We expect annual returns on government bonds to be near zero and even
\npotentially negative on a five-year horizon.<\/p>\n

The takeaway:<\/strong> Investors should focus on assets where they are being better rewarded for the risks entailed, we believe. High
\nvaluations and low growth do imply lower returns for risk assets versus history, but risk assets\u2019 returns are still attractive compared to
\nthose of safe havens. We see equities overall as relatively attractive in a low-yield world. Other assets offering attractive risk
\npremiums include EM debt. O
\nver the long term, we see more scope for investors to take advantage of the extra risk premiums
\navailable in alternative investments, such as real estate and private equity.<\/quote>
\n