PERSPECTIVE3-5 min to read

Outlook 2019: Multi-asset

The traffic light for investing is turning from green to amber, but it's not time to slam on the brakes just yet.



Johanna Kyrklund
Group CIO and Co-Head of Investment
  • The economic backdrop looks more challenging and there is a risk of US recession in 2020
  • Markets may prove volatile and government bonds can be a useful diversifier
  • There are still opportunities for positive returns; we highlight low emerging market valuations

We move into 2019 in a sombre mood after a year of challenging markets. While it is tempting to blame the political headlines, the reality is that economic growth outside of the US has been disappointing. Combined with rising rates in the US, this has led to weaker prices pretty much across the board.

Economic cycle is turning more challenging

Based on the indicators we track, there is now a reasonable probability of a US recession in 2020 as the impact of fiscal stimulus fades. We are cognisant that we are moving into a more challenging phase of the cycle.

Growth in Europe and Asia remains dependent on an acceleration in global trade, which we view as unlikely. At the same time, the best we can hope for from the major central banks is that they step back from their planned withdrawal of liquidity. 

Still opportunities for positive returns

Against this backdrop, we still see opportunities to generate positive returns.

The US 10-year yield is sitting quietly around 3% and we expect only a couple more rate hikes from the Federal Reserve in 2019. This should underpin equity valuations and provide diversification benefits from bonds in a multi-asset portfolio.

Lower oil prices should support consumption and put a lid on inflationary pressures. Emerging market valuations are provocatively low and provide a cushion to political concerns.

Caution needed amid likely volatility

In 2019, we expect markets to oscillate based on an assessment of the probability of US recession. The traffic light is turning from green to amber. We would emphasise more cautious investments, but we don’t need to slam on the brakes just yet.

The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors. Forecasts should not be taken as advice or recommendation.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested

To find out more about the Multi-Asset Solutions strategic capability, please click here

This article is part of our Outlook 2019 series, please check back for more over the coming days and weeks. The previous 13 in the series can be found by visiting our outlooks hub and / or by clicking the links below:

Global economy

Global bonds

Global equities

UK equities


European equities

Japanese equities



Asian ex Japan equities

European commercial real estate

Global cities


This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.


Johanna Kyrklund
Group CIO and Co-Head of Investment


Johanna Kyrklund
Multi-Asset Solutions

The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.