Welcome to JLT Investment Solutions’ 2018 Investment Outlook. As we look forward to the coming year, portfolios are wrestling with record high valuations. Every asset class appears expensive compared to historical standards but investors cannot afford to sit out the party, waiting for a crash that may not come, at least not in the near future.
There is an eerie calm. Equity markets barely react to events that once threatened the stability of currencies and financial institutions; stability in commodity prices has provided a favourable environment for growth; and synchronised global growth suggests we are at last breaking free of the effects of the great financial crisis of 2008.
However, under the surface rumbles a number of issues that could disturb these still waters. Politics has become increasingly polarised; ordinary folk are experiencing falling real wages; household debt is increasing; and no-one is really sure how the extraordinary policies of Central Banks over the past decade will play out.
This document aims to give our views for the coming year from a Pension Scheme investment perspective and we discuss four themes that merit consideration in positioning for threats, taking opportunities and building well balanced portfolios.