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B. G., Opalesque Geneva: Absolute return strategies will be a useful diversifier for investors this year following a challenging period in financial markets for both equities and bonds, according to Luke Newman, portfolio manager at Janus Henderson.
From the perspective of absolute return strategies, 2022 included huge bouts of volatility, constant inflationary upside surprise, and negative drawdowns for both fixed income and equity markets, Newman says in a recent video. The only asset classes that delivered a positive return have been energy and perhaps the US dollar. "The benefit of absolute return within investors' portfolios in this environment is more of a shock absorber within portfolios," he adds.
In 2023, one should prepare for a somewhat shallow recession. There will be opportunities on the short side in demand, and in elevated cost pressures.
Equity valuations have fallen a long way, and balance sheets are very high - sometimes partly thanks to money raised during the pandemic. The upside risks balance the downside risks, especially within stock markets.
The unappreciated risk is to the upside, he says. "That sounds strange when we are all subject to headlines that look very scary, talking about the economy. But … valuations to some extent and throughout a number of listed sectors and companies discou...................... To view our full article Click here
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