This year’s Long Term Outlook from the Multi Asset Group of Aegon Asset Management (Netherlands) focuses on several trends that have shaped the global economy and financial markets since the 2008 financial crisis. Numerous macroeconomic scenarios and their corresponding expected returns provide the basis for the strategic allocation update over the next twelve months, which is discussed in detail in our publication.
Trends shaping the economy a decade after Lehman Brothers collapse
Ten years after Lehman Brothers filed for bankruptcy, the global economy is strong and highly synchronized across countries. Most economies are now larger than they were before the crisis and the jobs that were lost have been reclaimed.
This year's Long-Term Outlook zooms in on several trends that have shaped the global economy and financial markets since the 2008 financial crisis. These include the rapid rise of the global middle class, the creation of the European banking union, the strong growth of technology companies, and finally the role of e-commerce in the economy.
Outlook for 2019 – 2022 and impact on our positioning
Worldwide economic momentum has been strong in the past few years. However, we expect this momentum to slow down on the back of future conditions that will likely become less supportive. These include the tightening by the Federal Reserve by increasing the policy rates and reducing its balance sheet as well as tightening by the ECB by ending its asset purchase program, which is known as quantitative easing (QE). Other aspects, such as increased shortages in the labor market, trade tensions or geopolitical unrest, might also make future conditions less supportive.
The strategic asset strategic allocation for a range of Aegon Asset management funds has been adjusted to reflect our market views and return expectations for the period 2019-2022. We ensure the asset allocation is robust by including the return outcomes of a negative and a positive scenario in our portfolio construction process.
The portfolio construction process has resulted in an underweight in core eurozone bonds and an overweight in Dutch mortgages within the fixed-income categories.
The underweight in core eurozone bonds is primarily driven by the tightening of monetary policy by the ECB, while Dutch mortgages remain an interesting asset class with attractive spreads. Across the different equity categories, our Long-Term Study has not revealed any significant opportunities to enhance returns against an acceptable level of risk. As a result, we have not implemented any deviations from benchmark weights within the equity categories.