In its 2019 Capital Market Outlook report released Jan. 9, GLC Asset Management Group recommends that investors take a neutral stance with a defensive bias for the year ahead.
"The general theme underpinning our outlook is moderation," said Brent Joyce, Chief Investment Strategist, GLC. "For market cycles, we believe acceleration is followed by moderation, before eventually giving way to decline. Today's debate remains about how much global economies and corporate earnings will grow and, importantly, not how much they will shrink."
The report highlights the economic insights and market forecasts, including regional forecasts for Canadian, U.S. and international equities, as well as sector forecasts for Government, investment grade corporate and high-yield bonds within the Canadian fixed income market.
Fixed income’s value
The report says fixed income’s value as a risk mitigation tool has increased and continues to increase. “We recommend a neutral weighting in fixed income, with a move towards higher credit quality. For fixed income investors, we see a one to two percent total return in 2019 for the Canadian asset class, with an overweight in high-quality investment grade corporate and government bonds.”
With respect to equity, the report’s authors say they believe the global economy and corporate earnings growth “are shifting from acceleration to moderation, keeping our near-term outlook constructive. On a risk-adjusted basis, a neutral stance is most appropriate.”
GLC’s outlook calls for equity price gains between eight to 12 per cent in North America. “We suggest continued exposure to participate in equity market growth without stretching one's risk tolerance.”
To learn more, consult the full report.