Invesco’s market outlook for 2019

Paul Jackson, multi-asset expert and head of research at Invesco, speaks to Jeremy Naylor about the outlook for markets in 2019.

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results

What causes the end of a bull market?

Stock markets have been weak in recent months, but this has not caused undue worry for Invesco. Paul Jackson, multi-asset expert and head of research at the firm, remains sanguine in his outlook for the global economy, seeing no recession in 2019 and a limited (albeit rising) risk of one in 2020.

War, inflation and recession are the three items which typically bring an equity cycle to an end, none of which look too likely right now. Inflation may begin to creep up, but this alone should not be enough to bring an end to the equity bull market.

For as long as there is economic growth, equities should continue to perform well. However, returns will be more muted than before, due to the withdrawal of stimulus from most central banks.

Asset allocation for 2019

According to Invesco, investors should consider positioning themselves slightly underweight in equities due to their volatility, with an overweight in real estate and cash.

Regionally, the US looks most expensive, with a Shiller price-earnings (P/E) ratio in the 99th percentile of its history going back to the 1880s, and would be mostly underweight, but the other markets look fair value. The Japanese market and eurozone equities are all worth having exposure to. Corporate bonds are preferred to government bonds.

Known for its actively managed funds, Invesco has had a presence in the exchange traded fund (ETF) space for some years and more recently bought Source, rebranding it under the Invesco banner in 2018. All these ETFs are available to trade on our platform and include the Invesco S&P 500 ETF (SPXS), which costs just 0.05%. Use our ETF screener to search for more of the range.

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