Potential risks that need to be monitored include central bank credibility coming into question, a deterioration in US earnings and the emerging market slowdown becoming more systemic. These factors are likely to create a volatile journey where returns will be moderate, but significant opportunities exist.
Toby Vaughan is head of fund management, global multi-asset solutions at Santander Asset Management
Investment trust outlook
QuotedData research director James Carthew says: “2015 was a great year for new issues, with 23 funds coming into our universe, 40 per cent of which were investing in the burgeoning debt sector. We expect to see more of the same early in 2016.
The renewable infrastructure sector took a knock in the summer as the UK government slashed subsidies but, as Bluefield Solar recently commented, there is a big pipeline of potential acquisitions of projects that got in under the wire and room for further growth in that area.
[But] 2016 could be a good year to be contrarian. There are swathes of funds exposed to commodities, Asia and emerging markets that really suffered in 2015 on the back of slowing Chinese economic growth. Might they be due for a rebound?
Given all the uncertainties, such as Brexit and the war in the Middle East, we can see why there might be considerable demand for funds that try to keep volatility low and/or focus on absolute returns.”
Japan outlook
Genzo Kimura, economist at SuMi Trust, says: “The Nikkei 225 is expected to surpass 22,000 in 2016. Stocks to watch include Toyota, Fuji Heavy and Kao, as sectors exposed to US auto sales, aviation and inbound tourism are set to benefit from improved economic conditions in the US.
Shinzo Abe will maintain his majority in the Upper House 2016 elections, with Abenomics continuing to govern economic policies. However, should the promised wage hike not release the bottleneck in Japan’s economy, Abenomics could come under scrutiny.”
