Mercer analyses market dynamics in the year ahead

Mercer analyses market dynamics in the year ahead

Mercer analyses market dynamics in the year ahead

  • 04-March-2014
  • United Kingdom, London

As major global investment markets come off a strong 2013, Mercer has released two related research papers that together assess the investment environment and suggest market opportunities  – “Outlook for 2014 and Beyond” and “2014 Strategic Themes and Opportunities”. Together they identify how investors can respond dynamically to changing market conditions and ensure that portfolios are robust to a range of economic outcomes.

Mercer forecasts that the market in the year ahead will be shaped by the following dynamics:

  • Stronger global economy
  • Interest rates staying exceptionally low
  • Equities perform well, but returns are lower than 2013
  • Core bond yields rise moderately
  • Most emerging markets outperform soft expectations
The key risk, says Mercer, is whether bond yields rise only modestly or whether the end of “cheap money” undermines the bond market and all asset classes.

“Very few markets look unambiguously cheap, and we see merit in being patient and adopting a long-term mind set,” said Deb Clarke, Mercer’s Global Head of Investment Research. “Investors should focus on building diverse portfolios and be ready to take advantage of market turbulence to make opportunistic allocations.”

“Perhaps counter-intuitively, the weak economic growth of the last few years has coincided with exceptionally strong equity markets,” said Rupert Watson, EMEA Head of Asset Allocation at Mercer Investments. “With global equity valuations no longer unambiguously cheap, future equity gains are likely to be more muted and require a recovery in corporate profit growth. We expect this to happen with stronger economic growth leading to stronger profit growth.”




About Mercer

Mercer is a global leader in talent, health, retirement, and investments. Mercer helps clients around the world advance the health, wealth, and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital. With over 55,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit Follow Mercer on Twitter @MercerInsights